"Suze Orman says you should save your money. So save your money."
I agree. I should save my money. But, stuff keeps happening that costs money. So then I have to spend it. Still, the point is valid, which is why whenever my parents ask me to eat dinner, I say, "Yes," since it means I'll be saving money.
Anyway, I am vaguely aware Suze Orman is a chick on TV who gives financial advice, but I've never actually seen her do her thing. So today when I was reading CNN, I saw an article about Suze Orman telling me what I can and can't afford, and clicked on it out of curiositiy.
People were writing in asking Suze for advice. The first letter was from a woman who, with her husband, owes $130,000 in student loans. Her husband works in sales and she has her own Mary Kay business and has recently started her own cake-decorating business. The woman was writing in wondering if her husband can afford to waste money on his passion for the Redskins, which includes buying high priced Redskins memorabilia, and investing in an expensive home entertainment room.
So, Suze crunches the numbers and decides they can't afford the Redskins hobby, because the Redskins hobby is costing them roughly $7,000 a year.
But in my opinion Suze missed a huge red flag. Don't get me wrong, spending $7,000 a year on a sports hobby is a little extreme, in my opinion, for a family that makes $100,000 per year, like this one. But, at least with a sports hobby you get what you pay for. Sure, you're wasting your money, but you're exchanging money for actual services, products, entertainment, etc.
The red flag: One thing the family should really cut out is the wife's Mary Kay "business."
Mary Kay is a multi-level marketing company. When the wife says she has her own "business" she means she sells Mary Kay products to other people and also attempts to sign other people up to sell Mary Kay products. She can sign up an unlimited amount of people, and they can sign up an unlimited amount of people, and the people who signed her up in the first place can sign up an unlimited amount of people, which means, by design, by the very laws of supply and demand, it will be impossible for the majority of these people to make any money off of their so-called businesses. It's a pyramid scheme, but it's legal because there are products being sold.
This is why real sales jobs usually have salesmen work off of specific lists or specific territories, so they don't over-saturate the market. A lot of times multi-level marketers will tell you starting your own "business" is no different from opening a franchise restaurant. But guess what? Franchise restaurants have rules on where they can be located in relation to other restaurants of the same franchise, specifically to make supply and demand work.
It's especially difficult to see any measure of success from a multi-level marketing business when you attempt to run the business as supplementary and in your spare time. They're usually advertised as easy ways to get rich quick without much work, which is the opposite of what they are. In reality, in order to get any return and be able to live off of it, chances are you'll have to have at least one real job, and then work at least full time on your multi-level marketing business, as well, probably earning less than you could make getting an hourly wage, which, you're not going to get.
Now, I don't know the specifics of how Mary Kay is run, and I haven't heard the same horror stories about Mary Kay as I have about Amway/Quixtar, but the fundamentals of multi-level marketing remain the same, and if I was Suze Orman, I would immediately recommend not dumping any money into those kinds of ventures as a way to immediately save money.
The upside of all this? It is pretty entertaining to read up on all the reasons why multi-level marketing doesn't work. It's also entertaining, but sad, to read the testimonies of the poor souls who have lost everything thanks to these deceptive companies. And, reading is a hobby that can cost virtually nothing.
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