Stuff vs Freedom

Lately I’ve been observing a difference in our diverse circle of friends and acquaintances. Some of them talk about making payments, and some of them talk about making investments. Some talk about pay day, and some talk about dividends. Some want to  go to the mall – others want to take a walk and chat about life goals.

I’ve nicknamed these two types of people Earners and Spenders. I hope you can guess which we are striving to be! We earn money and save a lot of it in our bank accounts. Our money in the bank gets loaned to people who are spending faster than they are earning, and they borrow for cars or credit cards. We are earning much faster than we are spending so we get to also earn some of the interest that the Spenders are paying to the bank for the opportunity to spend our money.

We invest the savings, too. Our money in the stock market (via mutual funds in our retirement and brokerage accounts) is used to buy pieces of companies that are earning money as well. Some of their earnings are given back to us because we own a piece of the company, which comes in the form of dividends and investment growth.

There are Earners and Spenders. Spenders say “Oh, you live in THAT neighborhood? It has too many chain link fences for my taste.” (I swear to god I’ve heard this.) And Earners say “Nice! You are still driving that car? Mine’s a 2004, I win!” Earners can earn money and eventually not work, by saving more and spending less. Spenders are always spending too much and will never be able to not work – or at least not until the government can give them a (tiny) paycheck.

Essentially the Earners are loaning their surplus money out to the Spenders (in the form of banks). The Spenders have stuff while the Earners have freedom. Which are you? Which do you want to be? Which do you value more – stuff or freedom?

ps/ obviously these two categories are broadly generalized, and everyone falls somewhere in between the two absolutes.

Multi-Level Marketing Scams Prey on Women

It’s about time that I weigh in on all of the multi-level marketing schemes (scams) that have been blowing up my social media lately! I’ve been noticing quite a trend here as well – I keep hearing from friends and acquaintances about their exciting new business opportunity – and I, too, can earn thousands of dollars in my spare time!

So let’s back up a step. Multi-level marketing companies are the ones that don’t have retail stores – they sell their products to local consumers, who in turn, market them to their own networks of friends, family, and acquaintances. They make money selling these products, but they also make money from recruiting others to sell their products as well. I think it began with Tupperware and Amway, but with the rise of social media these companies have exploded.

Just in my own network, I’ve got friends selling: jewelry, candles, make-up, skincare products, stickers for your fingernails, vitamins, weight loss shakes, stickers for your body that will somehow make you lose weight, cooking products, essential oils, purses, cleaning products, children’s books, and of course the soft, stretchy neon leggings that everyone loves.

But Who Is It?

The thing is, I’ve noticed a suspicious coincidence in who is buying into these businesses, and hence, who is selling their products.

It’s ALL women. #bossbabe

And in fact, among my network, it happens to be all women with children. Many of whom are either stay-at-home moms, teachers, or have some sort of job that allows them a bit of free-time. Things have been tight lately and a little extra money wouldn’t hurt, right?

These predatory companies are marketing “entrepreneurial business opportunities” to women and promising them the flexibility of a work-at-home job, with unlimited income potential. They avoid words like “pyramid scheme” and instead use happy terms like “network marketing”. They don’t give you facts about income or success – they just show you the photo of the fancy conference in Florida they just attended! And many of them require minimum purchases each month, where you just go deeper and deeper and never make a profit.

Emotional Manipulation

But leaving aside for a moment the super misleading money side of the equation – I’m equally interested in the emotional side. Specifically, the fears and insecurities these companies are exploiting, to get women to buy from, and into, these schemes.

Look at that list up above again – they ALL play to women’s fears of not looking traditionally beautiful or thin enough, not being a good enough mother or wife, or not having a perfectly clean, decorated home. All under the guise of feminism, and empowerment, and “living your best life”. Be your own boss!

The products are insanely overpriced, and the pressure at “purchasing parties” is usually awful. I have walked in the door to a skincare party and been given a quiz to tell me all the things that were wrong with my face – and of course the corresponding products that would fix me.

The underlying theme is that you are not enough. Not the way you are today, at least. If you would just buy this product – and it’s expensive because it WORKS – then your life will change. I’ve been asked if I don’t care about my health? I’ve been asked if I don’t want the best for my family? This is an INVESTMENT IN YOUR FUTURE. #girlboss

You should do this for your family. Hubby not on board? Do it anyway! He’ll stop complaining when you’re making more money than he is! WINK.

Show Me the Money!?

Outside of the truth that you are already enough, these companies are not going to make your life better. In fact, statistically speaking, they are very, very much more likely to leave you worse off than you were before you bought in. Hopefully you’ll escape the party with a $200 eye cream and feel guilty for a week. (probably you’ll also get another eye cream next month and not realize it was a subscription – oops) But worst case scenario you buy into the hype and leave with a “starter kit” for this “new lifestyle” – which will set you back hundreds if not thousands of your hard-earned dollars – and many women actually go into debt for this! (Because the bigger your investment, the bigger your commitment to success!)

But you don’t have to take my word for it. Here’s an independent report I found that was created for the Federal Trade Commission: “As a general rule, the more a new recruit invests in an MLM program, the more he or she loses. This, of course, is true of most any scam.”

Here’s my favorite line in the report: “One can do much better at the gaming tables in Las Vegas. And a person need not risk his or her social capital – treasured relationships with friends and family one has spent a lifetime cultivating.”

According to this report and others, 99.6% of multilevel marketing “businesses” lose money! If you are lucky enough to beat those odds, maybe just buy a lottery ticket! (ok but don’t do that either) But seriously – all my friends that have bought into these scams, have lost money and cut their losses within a year or two. But here’s the real issue: they make you feel like this is your fault. You didn’t work hard enough, you didn’t “turn off the tv”. You just feel guilty and embarrassed for failing, and you quietly slink off. That’s what I did after I bought into a makeup scam back in college. I had a party or two, lost my $500, and quit. But I was lucky. I wasn’t stuck with a garage full of last year’s leggings and $10k in debt.

Bottom line: multilevel marketing companies are viral and predatory. Please, girlfriend – don’t fall for it.

(The statistics in this article were taken from this report created for the Federal Trade Commission.)

How Much Money Would Change Your Life?

Have you ever played with the thought experiment “What if I won the lottery?” Even though we don’t ever buy tickets, we’ve still had this conversation once or twice. It’s a fun What If game that sets you to dreaming and may even lead to some great discussions about priorities and goals. Another version of this game is “What would you do with a million dollars?” and usually involves some version of quitting your job with flair and buying large and unnecessary consumer goods.

I just read a great book called Hand to Mouth: Living in Bootstrap America by Linda Tirado. It’s about being poor in America and the challenges and struggles that go along with it. In the Introduction to the book, she defines the terms she uses throughout:

Poverty: A quarter is a miracle
Poor: A dollar is a miracle
Broke: Five dollars is a miracle
Working class: Being broke, but in a decent location.
Middle class: Living in a nice area with personal furniture, able to purchase other items, and not (constantly) worry about homelessness.
Rich: Anything above the prior.

I really like her definitions (do you?), and they got me thinking. After you are no longer Broke, and five dollars is no longer a miracle… what IS a miracle? What constitutes a life changing amount of money when you are Working Class, Middle Class, or Rich?

Under the Working Class definition above, I’d say about $500 would qualify as a pretty significant windfall. This would establish a small Emergency Fund that could end the cycle of payday loans or other predatory lending stopgaps that people resort to with no other options. It could pay for a nice new suit for that job interview, or new tires on your car to get to a better job further from the bus route.

If you are Middle Class, about $5,000 would be enough to change something. This would establish a significant Emergency Fund, or help to pay off high interest credit card debt. It could help you to begin buying in bulk to save money, or pay your car insurance or property taxes in six month payments instead of monthly (usually a significant savings). It could allow for a class to get a new certification in your field, or just ease the anxiety of living paycheck to paycheck.

If you are Rich, you’ve got all the money you need, and it would take a good chunk of money to cause you to change anything about your life. I am very fortunate to count myself in that category. I wouldn’t change a thing about my life unless I received some sort of windfall of about $500,000 or more. This would put us squarely into the Financial Independent category, meaning we would no longer have to earn income to live on. We could survive off our investments and passive income alone. Meaning, we would be free to quit our jobs and pursue more travel or passion work.

So what about you – how much money would it take to change your life? Where do you see yourself on the continuum from Poverty to Rich? Do you agree with Ms. Tirado’s definitions (and my own additions)?