Dave talks with “Your financial life depends on it.”

Dear Dave,

I know you recommend using cash or debit cards instead of credit cards. But can you explain why my husband and I shouldn’t take advantage of credit card points for travel expenses that are required for work but will be reimbursed by the employer?

Cathy

Dear Cathy,

So, your employer is so poor they require you to advance them for your travel? You do understand if your employer decides not to pay you one month—for whatever reason—that it’s your credit card and your debt, right? Even if this hasn’t happened yet, you’re exposed to the risk. All for a couple of airline miles that are virtually impossible to use? No, thanks.

I understand this is standard procedure for some companies, but then a big chunk of corporate America has conned its employee base into taking out a loan on their behalf—with a promise of repayment—and the employee taking on all the risk. On top of that, these companies act as if operating this way is no big deal. Well, it is a big deal. And it’s not a good way to run a business or treat your employees.

Cathy, I once counseled a guy who walked into my office with $11,000 on his American Express card that was “supposed” to be reimbursed. Guess what happened? When he went into work earlier that day, he found a padlock on the door. The company he worked for had filed Chapter 11 bankruptcy, and he got nothing. At that point, he had $11,000 on his American Express card, and the credit card company didn’t care one bit about his company going broke. They wanted their money.

When you use a credit card, you spend more than when using a debit card or cash. Tons of research has proven this to be true. Using someone else’s money just doesn’t produce the same friction in your brain as paying for something with your own money. You don’t feel the sting of it leaving your personal account. Do you want to know something else? I’ve never met a single millionaire who pointed to credit cards and airline miles as the reasons for their financial success.

But I do know a lot of broke, middle-class people strutting around, bragging that they gamed the system. They’ll tell you they beat a multi-billion-dollar company, one that spends tens of millions of dollars every year on studying consumer behavior in depth, at their own game. No, they really didn’t. I’m telling you all this, Cathy, because I want you and your husband to protect your number-one wealth-building tool: your income.

Long story short: If you play with snakes, sooner or later you’ll get bitten.

— Dave

  * Dave Ramsey is an eight-time national bestselling author, personal finance expert and host of “The Ramsey Show.” He has appeared on “Good Morning America,” “CBS This Morning,” “Today,” Fox News, CNN, Fox Business and many more. Since 1992, Dave has helped people take control of their money, build wealth and enhance their lives. He also serves as CEO for the company Ramsey Solutions.

 

 

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Dave Says – without links

(Your Financial Life Depends on It)

Word count: 463

 

Dear Dave,

I’ve been struggling for about a year, ever since I made a stupid new-college-graduate decision to finance a car. It’s a 2018 Jeep Compass, and I owe $21,000 on it. The trade-in value is about $11,000, so I really got stung on the sticker price and everything else. I also have $85,000 in student loan debt and around $7,500 on credit cards. The good news is, I make $63,000 at my job, and that should increase to $75,000 by January of next year. My girlfriend and I are renting an apartment and engaged to be married in 2025. How do I clean all this up before then?

Austin

Dear Austin,

Well, the good news is, you have the rest of your life to never make this kind of mistake again. I’m really sorry you’re going through all this, son. What a horrible thing to experience right after college.

So, you’re $10,000 upside down on a vehicle you owe $21,000 on, right? The truth is, you’re kind of stuck. If you’re serious about getting out of this mess and not repeating the same mistakes twice, you’re going to be working like a dog for the next year or two. Right now, you need a serious side job nights and weekends—maybe two. And I’m talking bare-bones living. No vacations, and no eating out for a while. You don’t need to see the inside of a restaurant unless you’re working there. Get what I’m saying? No unnecessary spending. Period. On top of all this, you’ve got to start living on a strict, written monthly budget.

Now, about your fiancée. I get the desire to fix things before you get married. But married people work together on this kind of stuff all the time. Believe it or not, there’s no perfect time to get married. I mean, it sounds like you two have already decided to go there and figured out neither one of you are perfect. That’s just called being human. So, there’s really no reason to wait on tying the knot at this point. And the truth is, the two of you can whip your finances into shape faster and much more efficiently working on it together—as a married couple.

Austin, I want you tear into this debt like your life depends on it. Because guess what, dude? It does!

— Dave

*Dave Ramsey is a seven-time #1 national best-selling author, personal finance expert, and host of The Ramsey Show, heard by more than 18 million listeners each week. He has appeared on Good Morning America, CBS This Morning, Today Show, Fox News, CNN, Fox Business, and many more. Since 1992, Dave has helped people regain control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.

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