Investment diligence over nearly 35 years has Trucker of the Month on path to profitable retirement

Alan Kitzhaber: I've been very religious about investing my money instead of spending it, and it's put me in a position where I can feel comfortable retiring.

Todd Dills: Hey everybody. Todd Dills here with the Overdrive Radio podcast edition for September 9, 2024. We'll hear more today from part two of our talk with August Trucker of the month, Alan Kitzhaber, and a good bit about the subject you heard him addressing in brief at the top, namely investing for retirement. He's nearing the end of a nearly 35 year run of consistently putting aside 15% to 20% of his income in qualified retirement and other accounts to the point that he's nearly gotten to where he truly wants to go. That's retirement. Setting out on a variety of projects, including building a house in his property in Eau Claire, Wisconsin. Pursuit of photography and videography hobbies, taxidermy and more. As you heard in the prior podcast last week, some of you earlier when Kitzhaber achieved a significant milestone in May this year, he's passed 4 million mile behind the wheel of a single cat powered truck, his 1995 OakRidge Transport Kenworth T 600, pulling since 2010 for a single shipper. As is sometimes the case in the profiles that we ride of our truck of the year contenders that shipper the Midwest home improvement chain Menards.

Headquartered nearby to owner-operator Kitzhaber in Eau Claire, Menards was a little slow in getting back to us fully after I spoke briefly to their transportation manager, John Schmidley, in the run up to writing the trucker of the month story about Alan. Yet respond they did with Schmidley and company penning a bit of a tribute to their long running partner in Alan Kitzhaber and OakRidge Transport. What follows is Schmidley’s testament to Kitzhaber's success.

Here we go.

“Alan Kitzhaber began his driving career with Menard incorporated as an owner-operator under the company name Oak Ridge Transport. Kitzhaber did his homework, researching the opportunity as an owner-operator before signing on to work with Menards, and believed it would be financially beneficial. And it has been.

“He logged his first trip on November 10, 2010. In the nearly 14 years since that first load, Alan has safely logged 1,852,059 miles and counting, providing service to Menards. He's enjoyed delivering loads to the Menards retail stores and to the Menards distribution centers throughout the Midwest, where he's now well acquainted with Menards team members at the stores and DCs, as well as within the Eau Claire transportation Department, where he considers that team part of his family.

“One of the features that makes working with Menards attractive to the owner-operator is the drop and hook pickups and deliveries, ensuring that he is keeping his wheels moving, avoiding downtime. Alan also enjoys that serving locations in the Midwest allows him to be home, often maintaining a good work-life balance.

“It's close to home, and I soon discovered you made more money with consistent freight,” Alan has shared. “It was certainly a pleasant surprise,” he added.

“His dedicated commitment to safety, reliability, and communication have made him a valued team player within the Menards owner-operator program. His flexibility and abilities as a problem solver have served him well in that capacity, and he looks forward to continuing his successful driving career in the future.”

So we'll hear more from Kitzhaber directly about the importance of that partnership later in the podcast, for sure, but after the break, first off, his approach to business analysis and maintenance, both of which are absolute lynchpins of his successful shepherding of his equipment through 4 million plus miles of profitable hauling. So keep tuned.

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Todd Dills: That's HOWES, howesproducts.com, where you can find much more about Howes Diesel Treat anti-gel formulation and all of the company's fuel treatments, Howes Multipurpose penetrating oil, and more. Here's Alan Kitzhaber laying out more about his calculations through the years, which he used to make the determination that, well, sticking with his 1995 Kenworth T600 now for 4 million plus miles was the most cost effective choice for the profitability of his business. Likewise, Kitzhaber lays out the value of his 20 plus year partnership with JR truck repair in Chippewa Falls, Wisconsin. His go to maintenance partner.

Alan Kitzhaber: As far as maintenance expense, this is how I look at it. You have to take into account your maintenance expense, truck payments, insurance payments, all other payments that are required to operate that vehicle, and you have to look at what's that costing you per mile. Compare, that to the other option, whether that other option is a new truck or continuing to drive the same old truck, and whichever is less, is the route that I'm going to tend to go. In my case, I think driving the older truck that's more reliable, less upkeep, less problems, less downtime problems.

I don't have downtime problems. I don't get stuck on the side of the road, having to go to a truck stop, for repairs very often. Very, very seldom. Not being very disciplined about the maintenance program that I put in place. And I've had my truck worked on now since 2002, had my truck worked on by the same shop. And I get that truck in, basically, it's once a month or every 12,500 miles, I get it in and have it checked over, reach the drive line, the steering column, just look the truck over to see if they can find things. I can't tell you the number of times that they found little things here or there that if I hadn't done this, would have left me sitting on the side of the road or sitting in a way station some place, having had road service come out and work on my truck, which I absolutely hate being broken down while I'm on the road, because it's a big, big loss. How do you get back the downtime that you had? How do you get back that fine that you're going to get, or the additional expense of having road service come out and work on your truck?

All of those things get extremely expensive. It's much, much cheaper to be proactive and get in front of that, get that taken care of before you hit the road, so that when you're on the road, you feel confident that you're not going to have breakdown. And I've done really, really well with that, knock on wood.

But that's the big thing right there, is just being extremely, extremely proactive with maintenance, and have something that's getting worn out. The other thing I do, too, is I replace certain components based on time, not on wait until they fail kind of thing. I've talked to some guys, they ain't going to do anything until it fails, even if it's in Timbuktu, Tennessee, where there isn't a. Or maybe I should say Timbuktu, Montana, where it isn't a service shop. You know, maybe it's a hundred miles away.

Todd Dills: Now, what's the name of your shop? Where is it?

Alan Kitzhaber: Originally it was JR Manufacturing and Truck Repair. And the new owner called it JR truck repair and manufacturing just to keep the two separate. But it's, it's in Chippewa Falls, Wisconsin. I've been having my truck worked on there since April of 2002. I originally, I had my truck work done by Millis transfer at their shop originally, when I became an owner-operator, and that worked out for a while, but I wanted to have my truck a little closer to home. And this shop is 5 miles from the house that made it, that worked out really well. I tried having it work done at the Kenworth dealership. I did that for a couple of years. Problem with that is that they're basically there to replace OEM parts. And if you have anything else out of the ordinary, any custom work or anything, they're just not set up for doing that. And when you go with an independent shop, depending on the shop, they're more in a position where they can do that.

He does a lot of custom welding, and he has sheet metal work, building storage boxes for trucks and trailers and that sort of thing. So, they're a little more, well set up to handle those kind of. Sometimes you have certain components on the truck that the OEM product may not be as good as something that they can manufacture themselves. And I've heard that in a couple of instances where they've just manufactured a part, put it back in the truck better than what the OEM part will. That doesn't happen too often.

Todd Dills: Part of what made owner-operator Alan Kitzhaber an absolutely top notch trucker of the month candidate. Likewise contributing to his longevity as an owner is that diligence that you heard with respect to maintenance, that extends to bookkeeping and profit analysis, too. He's been building his own profit and loss statements closely analyzing his financial performance for decades.

Alan Kitzhaber: I have been keeping profit and loss statements in a, spreadsheet for many, many years, and I actually learned a lot. I'm sure you know who Kevin Rutherford is. I've listened to a lot of his stuff, his program and so forth, and he put an example. Profit and loss statement was in your magazine, I'm pretty sure. And I kind of use that as a guide to how I put together my profit and loss statement. I've been keeping. I'd have to go back and look, see how many years I've been doing it, but it's been a long, long time.

And, the fact that I was with Radio Shack, selling computers and electronics and so forth. I was selling computers back in 1981. The very first personal computer was being sold. So I kind of got in on the ground floor, and so I got exposed to the software and the word processing spreadsheet software sooner than most people did. So that has helped me, as well as just the experience of running a business, a retail business. You learned a lot there, which really applied. An awful lot of that applied to running a trucking business.

A lot of it just simple common sense. And I think that's the biggest problem most owner-operators have, is you got to run it like a business, not a hobby. And if they do that, they're going to be successful if they want to run it like a hobby. There are some guys that run it as a business and a hobby both. I mean, that's their whole life. That truck is their hobby and their business. And, that's fine. That's their thing. That's fine. But it's not for me. I see it as a tool to get me somewhere else. I want to generate profit from it. It's not my hobby. If it was my hobby, I'd be one of those guys buying a new truck every three years to have that pretty shiny truck going down the road. For me, it's just a tool for getting a job done.

This tool works really well, works efficiently, and it's profitable. And there's no point in me buying a new fancy tool when the old one does it a better. When I was interviewed by the folks from Caterpillar, I told them I drive for dough, not show. That's very simply, that's my philosophy that I go by. It's just truck is a tool for getting a job done.

Todd Dills: And as noted, getting him where he really wants to go. Namely, he's looking ahead to retirement, likely next year. And with three different overhauls over the history of the Caterpillar 3406 e in the T600, he's just about a half million miles into the last one, which occurred at 3.6 million miles. He's well set up on the equipment front to ride out his last year over the road.

You will not need another overhaul on this engine. if, everything goes according to plan for you, I don't suspect.

Alan Kitzhaber: No, I shouldn't. And I got, they had the option. You normally get a three year warranty when you overhaul the engine, and you can get an extended warranty out to four years for an additional charge.

And I did that this time around because that four years would take me past the point, past that date in which I plan to retire. that way I'm covered under warranty up to that point, which financially made a lot of sense.

Todd Dills: How much longer do you plan to stick it out for?

Alan Kitzhaber: Well, come January, I will have driven the same truck for 30 years, and in March, I will have been a driver, or a truck driver, for 34 years. So those are all even numbers, and that seems like a good timeline for me to wrap it up. I don't think Mike has to worry about me breaking his record.

Todd Dills: Owner-operator Kitzhaber is referring to recently retired Mike “Mustang” Crawford, who ended his final trip in his own 1994 Freightliner Classic with well more than 4,159,910 miles behind him, all under his own professional piloting since he jumped in the truck when it was brand new in the mid nineties. Much like Kitzhaber's 1995 T600 when he started driving it, buying it for Millis transfer just a couple of years later.

Alan Kitzhaber: I'm guessing he's somewhere between 4.2 and 4.3.

Todd Dills: He told me what his odometer reading was as he was pulling into the yard, ever with a flare for the dramatic. Mike Crawford, for sure.

Alan Kitzhaber: I'll be probably, come March of next year, I should be right around 4.1 million, which, if I wanted to try and beat Mike's record, I'd have to drive for another year. If there was a big pot of gold at the end of that rainbow, then, I could think about that. But it's all I see is bragging rights. I'd rather be retired. I got a lot of stuff that I want to do when I retiree. My biggest project is I have 40 acres of wooded land. It's near a lake that I plan on building a house on.

That's probably the biggest project. I like fishing and hunting and, woodworking. I do a little taxidermy. So those are the kind of. I also do photography and videography. Those are all hobbies that I want to do with when I retire.

Todd Dills: The trucking business has put you in a position to do that, settings money aside over the years. What have you done to prepare for that?

Alan Kitzhaber: It's the discipline to invest consistently that makes the difference. If you and I've done that, I've been very religious about investing my money instead of spending it, and it's put me in a position where I can feel comfortable retiring.

Todd Dills: In terms of investing, are you kind of an active investor? or is it more of a long term kind of IRA, 401K kind of stuff?

Alan Kitzhaber: Well, I've got, three IRas, just a basic Ira. I have a Roth Ira, a simple Ira. I have an HSA, which is a health savings account. And I have two individual accounts that are, ah, nonqualified retirement accounts. I've been ever since I started driving truck at that point, which was, I guess I was 31 32, something like that. I decided that that was the time because I'd saved money previously for, retirement, and, I had a decent amount of money saved up at that time, and then I spent it like a dummy.

So I figured that once, that was the time that I needed to get serious about investing for the future. And so I've been consistently investing 15% to 20% of my income since that time every year. Right. it varies. I kind of invest the same amount of money each year, but that percentage changes because of the income changing each year. But nonetheless, doing that over time just simply, gets you where you want to go. I have an account with Robert Baird or RW Baird company. I have a financial advisor there. One of his sayings is this. He said, it's not market timing that gets you there, but it's time in the market.

In other words, put your money to work and leave it there. Don't play with it, don't pull it out. That's kind of what I've done. I've just been very disciplined about that. And one of the, best investors this country or the world is known, which is Warren Buffett, said that that's his mantra, is just invest and stay invested. He also said, if you can't take a 50% decline in the market, you probably shouldn't be investing in the market. So it's really important that you just stay the course and not pull out. I've seen too many people that get antsy and market goes way down, and they pull out and the next day it goes up 10%. And, I saw that in 2009 with some folks, or 2008, 2009 period where we had the Great Recession. a lot of people that just couldn't stand watching the market go down, they got out, and then they didn't want to get back in because they were scared. And, it just, you've got to have the right, I guess, mindset when you do it. You just plenty to work and just trust history as your guide that things are going to work out. And it's worked for me.

Todd Dills: Why do you have the multiple different types of IRAs and the simple plan as well?

Alan Kitzhaber: The basic IRA that I have, just your normal run of the mill IRA, is the 401K money that I had when I was a Mills Transfer. I rolled that into that account. Simple IRA, replaced that IRa as a self employed individual. That became my IRA and then the Roth IRA just, I saw that as an option to have a set of funds that were, was not going to impact my tax return or you take that money out tax free so it doesn't affect you when you retire, as far as your taxable income goes. So I saw that as a way to give myself more options. And the other two accounts I have are just individual accounts, just cash, money that I need to have available to me if I need it for engine overhaul or any other kind of financial, calamity.

I needed to have that money available that I didn't want to take money out of a retirement account because you got to put that back or pay a heavy tax, do that. So that's the reason behind those two accounts. They were just one account. But then I decided to move money into a different investment program with Robert Baird, which created a whole separate account. They're kind of the same thing as far as what they mean to me, as far as financial resources go.

Todd Dills: The Roth option is also nice. If you. You really do need the principal, you could take that out, right?

Alan Kitzhaber: Yeah.

Todd Dills: Without fear of penalties before you reach retirement age, I guess, is the idea.

Alan Kitzhaber: yeah, I think there was a… The rules there were a little different, but I never had the mindset that I was ever going to take money out of there. Separate account that I established for that. But the nice thing about the Roth is if you decide you want to buy a new fishing boat, you just pay cash for it. You don't have to worry about any tax consequence at the end of the year, or that for me, in my case, I want to build a house. Bank is probably going to want to have a certain amount of money down. And, you know, depending on how expensive your home is, that if you had to take that money out of a qualified account that's taxable at the end of your tax year, ah, it really hits you hard where I can do it with Roth. It just puts me in a much better position. So that's the reason why I started that Roth. I did that a long time ago, in fact, the Roth Ira, I have more money in that than I do in my simple IRA because I put more money into it.

Todd Dills: Key to his success, at least over the last decade and a half, is that primary partner for freight, the Menards home improvement retailer with DCs and stores across the Midwest, headquartered, as I made note of in our conversation in Kitzhaber’s hometown of Eau Claire, Kitzhaber is no doubt fully aware of the value of the partnership. And before he even made the move to get his authority in hall there, he calculated that potential value, too.

Todd Dills: So the menards is headquartered in Eau Claire.

Alan Kitzhaber: Yes, they are.

Todd Dills: It's nice to have had that right by. Right close, to home there. And, was that a hard contract to get into?

Alan Kitzhaber: No, they have a business model there where what they were doing previously is they were farming out. Well, they have some of their own company drivers that do a lot of the short stuff, like up to Minneapolis St. Paul, and the shorter deliveries. But then they needed people that would do longer runs, that would be overnight kind of stuff, or difficult for a day cab driver to do. They would use other companies out there that had a fleet of trucks and depend on them to get the deliveries done. And from what I understood, that wasn't really working out too well. The reliability wasn't there. And so they went to a different business model of having anyone who's going to pull freight for them needs to own the truck that's doing it.

And I guess the theory there is you have a little bit more reliable service, apparently, that's working out for them, because that's the business model that they've been using for 14 years now in November that I've been doing this with them, and they started it a year or two prior to me contracting with them. So there's a number of guys that contract with them. So it's kind of an interesting way they do it, but it certainly seems to work out pretty good.

Todd Dills: I'm glad you’ve seen some success there, it sounds like, for sure.

Alan Kitzhaber: Well, one of the things that I like about it is, first, it's all that's close to home. And when I first decided to do it, I did the math on it and run the numbers on a spreadsheet and all that stuff to compare what I thought I would make doing this versus what I would make, at least to a common carrier. And it looked to me like I was going to take a little bit of a pay cut contract with menards, but the advantages, I'd be home on a regular basis, more consistent. I would be running regional rather than long haul. And, that was, you know, a compromise that I felt comfortable making. But what I discovered very quickly was I actually made more money doing this than I did with the common carriers simply because they kept me busy on a regular basis. I wasn't sitting stops waiting for that next load. So that I did, I didn't factor that in when I was doing my calculations, but certainly a pleasant surprise.

Todd Dills: The rest, as they say, is history, which you can delve into further in the prior podcast in this two-part series about August Trucker of the month Alan Kitzhaber, likewise Overdrive's feature story about the owner-operator. I'll post a link to both you can find in the show notes wherever you're listening. Overdrive Radio is on Spotify and Soundcloud, Apple Podcasts and YouTube, Overdrive's Facebook page and any listening platform really leave us a review there if you're enjoying these. And big thanks in advance for that.

Kitzhaber's Trucker of the Month selection puts him in the running for our 2024 Trucker of the Year award, sponsored by the fine folks at Bostrom Seating and Commercial Vehicle group. There's just two more slots left for contenders before we begin the process of evaluating all ten. For the final award, the Trucker of the Year winner will receive a new Bostrom seat up to a $2,500 value. Likewise, a custom scale model replica of their tractor as trophy and plenty bragging rights as Trucker of the Year through the next year. We'll recognize the winner at the Mid America Trucking Show in March, too, so get your nominations in by the end of September at Overdriveonline.com/toptrucker. Nominate your own owner-operator business or that of another deserving owner. That's overdriveonline.com/toptrucker. Here's a big thanks to Alan Kitzhaber for his time and congrats on so many miles, profits and a solid retirement plan.