A lot of my friends have gotten into MLM schemes lately, and it makes me sad.
What is an MLM scheme? From Wikipedia:
Multi-Level Marketing (MLM) is a marketing strategy in which the sales force is compensated not only for sales they generate, but also for the sales of the other salespeople that they recruit. This recruited sales force is referred to as the participant’s “downline”, and can provide multiple levels of compensation.
Basically, any of those “host parties and sell at home” companies are MLM companies. Sales people make money by selling items themselves and by recruiting others.
Now, don’t get me wrong. I don’t necessarily think all of these companies are bad. Some of them have great products. Personally, I love my Pampered Chef pizza stone, and I’m a sucker for Stella & Dot jewelry. But at least those companies are providing something tangible and not promising to change your life.
Lately, a number of my friends have gotten into the health-related MLM companies. I’m not going to name names, but basically, any product that promises to help you lose weight, get healthy, and change your life? It’s probably a scam. No seaweed wrap is going to take inches off of your body for any real period of time. And yet so many people get sucked into buying and then selling these products.
I don’t like the idea of any company that preys on the weaknesses of others to make a buck, especially when the sales people are doing it to friends and family. “Oh, you’re feeling fat? Well, here, buy this shake mix and you’ll lose weight fast!”
Is it lucrative? Sure, you can make money doing this. If you can make a few sales a month, sure, you might bring in a few hundred dollars. The real money comes from recruiting others so that you have a “team” beneath you. I know people who make serious money selling Pampered Chef products, and I can only assume you can do the same with these “health improvement” products. Though those people work incredibly hard to make the money they bring in. I certainly wouldn’t call it easy money.
I’m sure that when you’re struggling to make ends meet, the idea of hosting parties and making money at the same time is a great one. And hey, maybe being a Tupperware salesperson is totally a good thing for you to try out. But please, please don’t try out those companies that prey on others, that make grand promises that they certainly can’t keep. No product is going to make you thin and fabulous for no effort on your part and you don’t want to be the person selling those. At least this Thirty-One bag only promises to hold things. It lives up to those promises.
And one last note – these businesses cost money. You want to sell the products? Be ready to buy a starter kit. Be ready to pay for your online sales. Again, I’m not saying it’s a bad idea, but nothing comes for free. Be aware of what you’re getting into. Is this really the best way to bring in some extra money? Do you really want to be hounding your friends to host parties for you?
Megan is a 40-something government employee in the Washington, DC area. She got interested in Personal Finance when she got out of college and realized that her paycheck wasn’t going to go as far as she had hoped. Since starting this blog, she has managed to buy a house and make a solid start on her retirement goals, and hopes to help others do the same. Here is her story:
In 2007, I was a gainfully employed 20-something with no debt but not a lot of knowledge about personal finance. It was a co-worker’s comment about Roth IRAs that sent me to the internet, searching for information. It was then that I realized that I really didn’t know a whole lot about personal finance and that my current financial situation was due a lot to inherent frugal tendencies, generous family members, a fear of debt, and good luck. While that was working for me, clearly I needed a better plan.
While I had no debt, I was also pretty much living paycheck to paycheck and not worrying about going over budget (I say this as if I had a real budget) because I had an emergency fund set aside to cover any overages.
Except that’s not what an emergency fund is for.
So I did a lot of research, read a lot of blogs, and decided that I needed a plan. I needed to budget. I needed to know what I was spending my money on. I needed to prepare for the future.
I decided to create a blog not only to make myself accountable to others but also to share the knowledge that I gained along the way. I’ve learned so much from my fellow bloggers, and I hope that my readers can find something useful in what I have to share as well.