I think we are in a time of major transition for fire fighting in this country. So, what are the trends and what do they mean?
The biggest adjustment will be the transition from a primarily volunteer fire fighting force to some sort of paid fire fighting source. Economic and social trends are reducing the volunteer pool each year. Local governments will be forced to pay for fire fighting labor if they want to provide fire fighting service.
The result of the paid fire fighter economics will be fewer yet larger fire departments. The costs of more expensive trucks and paid, properly trained, and equipped fire fighters will result in some form of combination and merger to increase efficiencies. Some local governments will perhaps combine their fire departments. Some counties may form larger, county-wide fire departments.
Citizens will expect more from their tax dollars. Citizens will become more forceful in expecting higher quality and less expensive fire fighting and rescue services. The forward thinking departments are starting to prepare for this now.
In Summary
It's impossible to predict exactly when this trends will affect your department and community. But the smaller pool of volunteer labor (think of the bargain our country has received for the past 233 years!) will dramatically shape the future of fire fighting in this country.
Stay safe!
John R. Hill
Apparatus Budgeting Consultant
ENVIZION Financial
www.envizionfire.com
Wednesday, August 26, 2009
Wednesday, August 19, 2009
I'm speaking at 2009 FRI
I am speaking at the FRI2009 in Dallas this year.
I will be speaking on Thursday morning, August 27.
My topic is: Fire Truck Financing: The goofs, the myths, and the nasty tricks.
I hope to see you there. If you come, ask me some hard questions and I'll be glad to help.
Stay safe!
John R. Hill
Apparatus Budgeting Consultant
ENVIZION Financial
www.envizionfire.com
I will be speaking on Thursday morning, August 27.
My topic is: Fire Truck Financing: The goofs, the myths, and the nasty tricks.
I hope to see you there. If you come, ask me some hard questions and I'll be glad to help.
Stay safe!
John R. Hill
Apparatus Budgeting Consultant
ENVIZION Financial
www.envizionfire.com
Wednesday, August 12, 2009
Fire Truck Financing: Be careful about this con game
I came across the boldest financing con game of my life the other day. I received a call from a department who asked me to review their financing offers. They thought the best offer was an offer of 4.5% - which was well below any other offers.
It seemed too good to be true... and it was. First, some background. There are several ways to legitimately calculate interest rates and terms - APR, simple interest, rule of 78's, and others. All these methods have been used in the past and would be considered "legit". But this offer wasn't even close.
Here's what the trick was. The 4.5% interest rate was charged on the entire borrowed balance each year - even as the balance was being paid down each year.
Here's what that means. The department wanted to borrow $100,000 over 10 years. Each year, the balance would be paid down about $10,000. The interest payment each year should become smaller because the balance is lower each year.
Now, in this offer, the department was expected to pay $4,500 interest every year (the 4.5% rate on the $100,000 borrowed) EVEN THOUGH THE BALANCE WAS GETTING SMALLER EACH YEAR.
The result is the "true" effective rate of this offer was 7.28%, far above the other offers and the stated interest rate of 4.5%. This offer would have cost the department over $15,495 in wasted interest compared to the 2nd best offer of 5.00%.
In Summary
Sorry to say but don't stop your analysis of financing offers at the interest rate. Even legitimate interest rate calculations can provide a variety of costs. And sometimes, there are sharks out there providing totally bogus information.
Stay safe!
John R. Hill
Apparatus Budgeting Consultant
ENVIZION Financial
www.envizionfire.com
It seemed too good to be true... and it was. First, some background. There are several ways to legitimately calculate interest rates and terms - APR, simple interest, rule of 78's, and others. All these methods have been used in the past and would be considered "legit". But this offer wasn't even close.
Here's what the trick was. The 4.5% interest rate was charged on the entire borrowed balance each year - even as the balance was being paid down each year.
Here's what that means. The department wanted to borrow $100,000 over 10 years. Each year, the balance would be paid down about $10,000. The interest payment each year should become smaller because the balance is lower each year.
Now, in this offer, the department was expected to pay $4,500 interest every year (the 4.5% rate on the $100,000 borrowed) EVEN THOUGH THE BALANCE WAS GETTING SMALLER EACH YEAR.
The result is the "true" effective rate of this offer was 7.28%, far above the other offers and the stated interest rate of 4.5%. This offer would have cost the department over $15,495 in wasted interest compared to the 2nd best offer of 5.00%.
In Summary
Sorry to say but don't stop your analysis of financing offers at the interest rate. Even legitimate interest rate calculations can provide a variety of costs. And sometimes, there are sharks out there providing totally bogus information.
Stay safe!
John R. Hill
Apparatus Budgeting Consultant
ENVIZION Financial
www.envizionfire.com
Wednesday, August 5, 2009
Fire Truck Financing: Are you financially competent?
Can you name all 7 factors that control how much you pay to borrow? Do you know the differences between a walk-away lease and a turn-in lease? Fire departments are forced to become the "expert" in more and more areas. Failure to do so may mean wasting thousands of valuable budget dollars.
As the cost of buying fire apparatus and running a fire department become higher, the stakes become higher. More money means the opportunity to make larger mistakes. It's tough enough to become proficient on the operational aspects of a department - think specialized rescue tactics and the equipment needed - without also now becoming a financial expert.
But financial expertise is becoming essential. In these times of tightening budgets, it's important to have a firm grasp on financial matters to be successful. This expertise may mean that you demonstrate your community value to prevent budget cuts. It also means doing more with less money. Finally, it means avoiding apparatus purchasing and financing mistakes in times of $500,000 trucks and $1,000,000 aerials.
In Summary
Just as your department needs to develop additional operational skills, it's important in today's world to develop your financial skills to survive and even thrive.
Stay safe!
John R. Hill
Apparatus Budgeting Consultant
ENVIZION Financial
www.envizionfire.com
As the cost of buying fire apparatus and running a fire department become higher, the stakes become higher. More money means the opportunity to make larger mistakes. It's tough enough to become proficient on the operational aspects of a department - think specialized rescue tactics and the equipment needed - without also now becoming a financial expert.
But financial expertise is becoming essential. In these times of tightening budgets, it's important to have a firm grasp on financial matters to be successful. This expertise may mean that you demonstrate your community value to prevent budget cuts. It also means doing more with less money. Finally, it means avoiding apparatus purchasing and financing mistakes in times of $500,000 trucks and $1,000,000 aerials.
In Summary
Just as your department needs to develop additional operational skills, it's important in today's world to develop your financial skills to survive and even thrive.
Stay safe!
John R. Hill
Apparatus Budgeting Consultant
ENVIZION Financial
www.envizionfire.com
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