Respected financial guru and best-selling author Dave Ramsey has directly addressed a financial issue that could potentially affect many employees, especially those who travel for work and may be asked to front expenses. This is what Ramsey said.
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During an episode of the Ramsey Show, a listener called in for advice on why she and her husband should not take advantage of getting credit card points for travel expenses required for work but reimbursed by their employer. Ramsey immediately responds, “So your employer is so poor that you have to pay him advances for your own travel?”
The caller seems momentarily taken aback by Ramsey’s blunt response and laughs nervously before answering no. This didn’t deter Ramsey, known for his blunt but honest financial advice, as he continued: “Why do they require you to advance them for your own trip?” Ramsey points out the ridiculousness of the caller’s employer, saying that the caller is traveling on behalf of the employer, but he is not paying for this travel in advance. Ramsey asks the caller if the employer will make him pay for that.
In response, the caller revealed that this was just the company’s established protocol, and they are not sure why as no one ever asked them. Ramsey explains the serious danger of taking out loans on behalf of your employer. He explained that if her employer decides not to pay them for a month, their credit cards still have to be paid off, not the employer who is left with that debt. The caller acknowledges this to be true.
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Ramsey tells the caller, “You understand that I am the man who has been advising and coaching people for 35 years.” Over those years, Ramsey has seen this type of employer debt go sideways and shares that a man once came to him with $11,000 on his Amex that needed to be paid back. Ramsey explains that when this man came into the office one day and there was a padlock on the door, the employer had filed for bankruptcy. The man who had taken out a loan from his employer now had $11,000 on his credit card. Ramsey revealed that “Amex didn’t care if his company went bankrupt. They wanted their money.”
Ramsey and the caller agreed that this was a problem, and the caller told Ramsey that they had not experienced the situation Ramsey had described. Ramsey quipped back, “I know, but you’re at exactly the same risk,” adding, “All for a few air miles that are virtually impossible to use? No thanks.’ According to Ramsey, this is an example of how corporate America has enticed its employees into taking out loans on their behalf with the promise of repayment, and the employees end up taking on all the risk. Ramsey adds, “These companies act like it’s not a big deal to operate this way. Well, it is a problem. And it’s not a good way to run a business or treat employees.”
Ramsey informs the caller that he wants her and her husband to protect their income as it is their main tool for building wealth as no millionaire has successfully built their wealth with airline miles and credit cards. Finally, he also warned: “If you play with snakes, sooner or later you will be bitten.”
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This article Dave Ramsey goes straight to tackling employer debt: ‘So your employer is so poor that he wants you to promote it?’ originally appeared on Benzinga.com
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