DEAR DAVE: My wife and I are debt-free except for our home. She travels one week per month and charges her expenses to a personal credit card for reimbursement later. I’d rather we open a checking account with debit card privileges just for these expenses. What do you think?
DEAR DUSTIN: I’ve got to say I like your idea better. The problem you’re both facing now is this: If her company ever shuts down, there’s a good chance you guys are stuck with credit card debt.
Years ago I had a client who was working for a company, and he’d run up travel and business expenses on his American Express card. Like your wife’s situation, his company would then reimburse him for expenses. Then, he made a business trip to Europe, and, while he was there, his company asked him to pick up some computer equipment. The cost of the trip and equipment was about $22,000. When he returned to the office with all the computer stuff in tow, the front door was padlocked. The IRS had shut them down, and they went into bankruptcy. And guess what else? He never got the $22,000 from the company!
Credit card companies don’t care about the circumstances. They want their money, period. You guys have done pretty well if you’re debt-free except for your home. But your wife is playing a game called Financial Russian Roulette.
Never take personal responsibility for company expenses.
DEAR DAVE: I’m considering a career change and becoming a financial advisor. It would mean a 45 percent cut in salary for three to four years, and I’d have to take on debt in order to survive the cut. Is this a smart move?
Continue reading this story on the...