When a caller named Alex calls Dave RamseyThe show for financial advice, he probably didn't expect to hear a warning that he was about to lose tens of thousands of dollars. But that's exactly what happened.
In Tiktok's clip, he shared Alex's questions about using company allowance to pay a $38,000 vehicle loan, but he didn't back down.
Alex recently accepted a job involving heavy travel. As part of his compensation package, the company provided him with monthly vehicle allowances. "So I went out and bought a brand new car," he said.
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However, the loan is entirely in Alex's name. He told Ramsey, adding: "I owe about $38,000."
When Ramsey explained that the company did not require employees to get loans or leases to get allowances, Alex confirmed they did not. The only requirement is that the vehicle is eligible for reimbursement within the new four models.
Ramsey is quick to point out that Alex misunderstood the purpose of the allowance. "They ask you to use your car to work, so they give you the stipend for the vehicle," Ramsey said. "They don't need you to pay to get the stipend for the vehicle."
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The financial expert stressed that binding allowances to auto loans is an expensive mistake, especially when cars quickly lose value due to a large number of Alex drives. "You're going to turn $38,000 into $8,000 of $8,000 and you're going to blink," Ramsey said.
One of Ramsey’s key points is to put your assets that are too much income into depreciated assets. In Alex's case, his family had about $53,000 in a vehicle abduction, and his wife had about $38,000, about $15,000. That's more than half of their annual income.
"You don't bundle a lot of money in the wrong way as a rich person," Ramsey said.
See also: Maximize retirement savings and reduce taxes: Arrange a free phone call with a financial advisor to start your financial trip – no cost, no obligation.
For those in the situation with Alex (traveling frequently and applying a lot of miles on the car), Ramsey suggests treating cars as business tools rather than luxury.
"You want to lose as little money as possible on a vehicle that destroys value and can still get the job done," he said. This means choosing a reliable, comfortable used car at the company's request - ideally you can replace it more frequently and pay in cash.
Ramsey reminds listeners that if Alex's work ends tomorrow, the allowance will disappear—but the $38,000 loan won't. This is the risk of relying on benefits rather than sticking to a solid financial plan.
Bottom line: It is wise to go beyond short-term benefits before taking on debt, especially before a job-related vehicle. Consider the long-term impact on your finances and if the job goes away, but the payment will remain.
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Image: shutterstock
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