Having a corporate credit card through your employer is often a necessity and may even have some personal benefits. In many cases, though, employees are required to pay the credit card bill out of their own pocket and are then reimbursed by their employer. This scenario has a few downsides.

First, it disrupts your personal cash flow by tying up your money until the reimbursement occurs.
If your employer doesn’t approve a particular expense item or becomes insolvent before it can repay you, you could be out for the amount that you cover. Even if your company is just slow to process payments, this system could cause you to cover for your employer’s expenses for months at a time.

Second, it gives you the possibility to pay late or less than the full amount, exposing yourself to interest and penalty fees. We all know that the responsible use of credit means regularly paying our credit card balance in full and always paying on time. When the responsibility for those actions shifts to employees from employers, it’s more likely that an improper use of credit will occur.

Lastly, it adds more complexity to your budget. Since transactions are intermingled with your own personal money, you’ll need to track them closely. To handle this scenario, I have an expense category called Reimbursed Job Expense. I capture both corporate credit card payments and reimbursements received under this category. Ultimately this category should balance to $0 as I am reimbursed for my corporate purchases. Until that occurs, I can track the amount I have spent, which is also the amount I am owed.

Making your employer aware of the downsides of your current corporate card payment method might inspire your company to change. An alternative method is to have employers handle corporate credit card payments directly. That shifts responsibility back to the ones who are mandating the expenses.

How are corporate card payments handled by your employer?

Just over a year ago, I arrived in London for a weekend trip put on by my school. Students from my class were flown in, put up in a hotel, and fed for free: an absolutely amazing trip, right? However, at that stage in my life, my mind was fixated on frugality: don’t spend any money, save all I can, keep more for later. When my friends went out for dinner, I stayed in; when they went to a pub, I was checking my email. As a result, I wasted an amazing opportunity to explore London because of my extreme frugality.

Fast forward a few months, when I took a five-day trip with a few friends to Amsterdam, in the Netherlands. While we were there, I simply didn’t think about money: if I wanted food, I bought it; if I wanted a souvenir, I also bought it. I enjoyed the stay there an incredible amount, but when I returned home and checked my balance, I was shocked: hundreds of dollars more spent in five days than in the previous month.

What I learned from these two experiences is that there exists a happy medium between these two extremes: one shouldn’t be too frugal, but one should also not spend too much! Given that this is a personal finance and investing blog, I wouldn’t be surprised to find that we have as many over-savers as we have over-spenders. The funny thing is, personal finance blogs almost always chastise people for overspending, but in real life, being too cheap is just as bad.

Don’t forget to live life. If you are saving every penny you earn, but you don’t need to, would it improve your life to loosen your purse strings every once in a while? I found that by creating a set of bank accounts solely dedicated to specific purposes, I was able to automatically deposit a set amount of money into these accounts and spend it guilt-free. I now have a predetermined amount of money dedicated to traveling, to vacations, and to purchases I want to make in the future. Having these accounts protects me from over-saving and not taking advantage of life.

If you are a big saver, good for you: it’s a much better problem to have than spending too much. Don’t forget to take the time to make sure you are living as well, though. Don’t waste your weekend in London hiding in your hotel room, afraid of the conversion rate of the British pound: set a reasonable budget and stick to it.

Are you an over-spender or an over-saver?

Like most people, I love a great deal. Unfortunately, there are times when an apparent deal is not a deal at all. Here are some typical types of non-deals.

When You Spend More to Save

Many deals only come into effect when you spend a certain amount of money. Saving $20 off a $100 purchase is great if you were planning to spend $100, but doesn’t make sense if you have to buy more than you want to get the deal. The same holds true when shopping sales. If a store is having a 20% off sale, should you buy what you would have bought without the sale (and spend 20% less) or buy even more so that you spend the full amount you intended, or more?

When Non-Deals Are Less Expensive

A coupon that reduces the price of a movie rental from $4 to $2 sounds pretty good until you consider that Redbox, or a similar alternative, may offer the same movie for $1. The important thing is not how much you save over a regular price but the reduction in spending that a deal offers when alternatives are also considered.

When it Generates Waste/Lacks Value

At fast food restaurants, you are typically offered a larger drink for only a few cents more. An extra 20 cents for a significantly larger cup sounds great, but only if you actually want the extra amount and you are going to drink it. If you end up throwing it out, the deal leaves you worse off. Even if you don’t plan to waste it, the value you get might be reduced by taking the deal. Many places offer unlimited free refills on fountain drinks. If I can refill my small cup as often as I like, I can get just as much as someone with a larger cup, for less money.

When You Know It’s Too Good To Be True

This is a case I covered in How Good a Deal Can You Ethically Accept. When you know a deal is only due to cashier error, computer glitch, etc., you may only be able to accept so much of a discount before you start to feel guilty.

What other examples of non-deals have you encountered?

Do you love your work? Everybody has heard the saying “Do what you love,” and most have become immune to the phrase. But what is the difference between working at a job you love and at a job you tolerate or are forced to do. What is it costing you to be working at a job that you like compared to one that you really love?

Let’s look at what having a job that you love versus everything else can mean to you:

1. Working longer – If you love what you are doing, you will be drawn to working at it more. Nobody will have to ask you to stay longer or to come in on the weekend; it will be something that you will want to do on your own. You will automatically start putting in 110% in terms of time. The market or your boss will take notice and your compensation will also increase.
2. Increased effectiveness and productivity – Because you love the work, you will want to learn everything about it and become the best at every little nuance of the job. It will be easier to get to the point where you can accomplish tasks perfectly the first time without having to redo them because of poor performance. Increased effectiveness and productivity will automatically lead to higher compensation and better pay.
3. Job security – Companies regularly lay off the low performers, especially in this economy. Picking a career that you love will make you immune to job layoffs because you will be the most effective person at the job. You will be producing as much as several other people can produce together. Letting go of you will cost the company a lot more than keeping you. And if you are ever let go, you will usually have many offers from other companies waiting for you.

Look over your job situation today and decide what you have to do to get to the job that you love. Start making a plan to get there as soon as you can.

Excessive debt can be just as restrictive on spending as responsible use of credit. Coupled with the reduced freedom that accompanies debt, lowering – or eliminating debt – is a worthy goal.

Consider two different people, one who pays her credit card balance in full and another whose credit is maxed out. The first lives within her means by choice and the second is forced to live within his means because he can’t tap into credit for more wasteful spending. Both are basically in the same situation, but the first person has significantly more freedom.

Which person has the flexibility to take a much needed vacation or effortlessly handle an unexpected repair bill? The first person could use her credit card for either purpose. That probably isn’t necessary, though. Her lack of debt probably also let her build an emergency fund and perhaps a vacation fund. The second person would be stuck. Since his money was mostly going to the high interest and fees of his credit card, he probably has little savings and no way to pay for either expense. He may have to forgo the vacation and turn to a prohibitively expensive payday loan for the car repair.

The liberation that comes with lower debt extends beyond credit cards. Making a significant down payment on my house did more than allow me to avoid PMI. The equity I started with as a result, plus the additional equity prepaying added, made it so that I didn’t have to worry about declining home prices when it was time to sell. If I had less equity, I might have been forced to stay in that house even though I wanted to relocate.

To accelerate your own plan towards more freedom through lower debt, you can consolidate your existing debt with a P2P loan from Lending Club. By considerably lowering the average interest rate on your debt, you’ll be able to pay it off much more quickly. As your debt melts away, so too will your stress, as freedom returns to your life.

Is a high level of debt restricting your freedom?