Why You Shouldn’t Join a Multi Level Marketing Company (and What to Do Instead)

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Why Multi-Level Marketing Companies are the Wrong Choice for the Aspiring Entrepreneur

A lot of the topics I discuss on this site involve ways to effectively spend and allocate your money, whether that be though repaying student loan debts, choosing investments, or buying a new home. One thing that’s not talked about enough, though, is how to actually make more money. Increasing your income is arguably the most important factor in your “financial equation”, and one that is often minimized by many in the financial industry. Recently I’ve received a lot of questions about how to increase income, whether that be through your current career or starting a side hustle. One question stood out and brought up some points that may be important for you to consider:

“I’ve noticed some of my friends leaving their jobs to start selling makeup or skincare products for a well-known Multi-Level Marketing (MLM) company.  I always thought these types of businesses were unreliable, but more and more people I know are joining them and they seem to be doing well. A friend has asked me to join her team…should I?”

Now, this may sound like an appealing offer — to be your own boss and make money on your own hours — BUT…

I would recommend staying far away from these MLM sales organizations. I completely support the entrepreneurial spirit, and wanting the work freedom these types of businesses claim to offer, but you’re much more likely to find success and fulfill that spirit in other ways. The best way, in my opinion? Get involved in or even create your own bona-fide startup!


What’s a Multi-Level Marketing Company?

Before going in to why I’m so pessimistic about these “businesses”, it’s important to talk about what exactly they are, because most people aren’t entirely sure. Unfortunately, the opportunities most companies depict couldn’t be further from the truth for the majority of their “business owners”; their business models make it hard to identify the full job responsibilities on the surface. To add to the confusion, this type of business goes by many names, including Multi-Level Marketing, Direct Selling, and Network Marketing. If you find a brand that identifies as any of these things, consider that your first warning sign.

What’s the difference between a “normal” company and an MLM?  In a “normal” company, the company makes its revenue (for the most part) in one way: by selling products or services to customers.  MLMs, though, are different. If you “build your business” by working for an MLM, you make money in two ways.  Some of your revenue comes from selling their products… but most of your income comes from recruiting salespeople to work below you. MLM companies are common in industries such as makeup and skincare, haircare, nutrition, and sometimes even insurance. (Fun fact — if you look back and some of my more controversial posts about the insurance industry, you will find some comments from one of the biggest MLM insurance companies out there.)

Before making the career change to an MLM, or any career change for that matter, you should be sure that you are fully prepared to do so. Just like any other transition to a new career, jumping in to join an MLM requires planning. You need to make sure you are financially ready for whatever may come with the change — because sometimes it can bring on more financial hardships than expected. If you are unsure how to do this, take a look at my free Quit Your Job guide, where I break down the steps on how to prepare and how to know when you’re ready to make the shift.


How Do I Know if a Company is an MLM?

With so many different business structures out there today, it can sometimes be difficult and confusing to identify which companies actually operate with an MLM business structure. If you see these things in a company, they are most likely an MLM:

Advertising opportunities to “be your own boss” or “work few hours but get big pay”. These types of companies love to highlight that their independent distribution structure means the distributors have huge freedom in when and how they work. While this may be true, using it as a selling point is slightly misleading; working few hours and earning big pay only comes for a small few in the company.

Their products are not sold in stores. Oftentimes the products these companies are selling are not available for purchase anywhere else, making them the sole distributor. Most of the time you will not even see these companies on Amazon, which is shocking in this digital age where so much of our shopping and purchasing is done online. These products are typically purchasable through distributors (yes, these are those people in your Facebook feed posting about buying the latest, most innovative nutrition supplement).

They don’t just want you as a customer; they want you to sell it as well.  This is probably the biggest giveaway of an MLM company. When those selling the product are asking you to join their team and sell as well, know that their motivation comes from the ladder structure I mentioned earlier. Any company where your ability to recruit new employees has an effect on your income is one you should probably avoid.


Here’s Why Joining an MLM is a Mistake

Now that we have a clearer image on what exactly this type of company looks like, let’s address why joining one might not be the right move.

These companies have a very dubious business model.  A business structured so that your earning potential stems from recruiting people to sell below you is not sustainable. The relevant regulators in the US haven’t come out and outright said that MLMs are pyramid schemes… but they’ve come very close to.  Additionally, these companies usually have a “minimum monthly spend” amount for their employees to maintain an inventory of the product. They must purchase a specified amount each month in order to stay eligible as a distributor. Any company worth working for will not force you to spend money to buy products each month.  And indeed, these spending requirements are one of the primary reasons that so many people drop out of MLM organizations after only a few months.

The economic rewards promised are highly unlikely. In fact, the majority of MLM workers actually lose money (oftentimes due to that pesky minimum monthly spend mentioned above). The median MLM distributor often only makes around $2,500 a year, rather than the big bucks these companies advertise.  And (not to give you horrible flashbacks to 10th grade math class), if the median employee only makes about $2,500 per year, that means that half of the distributors make less.  The people who are making hundreds of thousands of dollars a year are the 1% of the 1%, and usually got into the company very early. It’s highly unlikely to have the same success as you see in the testimonials on their sites.

Along with that, there are only a tiny percentage of people that stick it out long enough to even get to a point where that would be possible. 50% of people drop out of MLM businesses in the first year, and only 10% stay longer than 5 years. To put that in perspective, it’s been found that 50% of small businesses last 5 years or more; that is a significantly higher success rate, and is even more meaningful when considering the fact that small businesses often have a reputation of being hard to maintain in the first few years.


Don’t Quit on Your Entrepreneurial Goals… Just Don’t Join an MLM!

It is highly commendable to want to pursue a more do-it-yourself career, or position yourself in a job where you have flexibility and entrepreneurial abilities. If being your own boss appeals to you, do it, just don’t do it by selling makeup or overpriced energy drinks and by recruiting other salespeople to join you.

A little personal blurb…I had an experience recently at a networking event with an independent distributor for a major energy drink MLM. This woman was very knowledgeable not only on the product, but on health and wellness in general. She knew her stuff and had a lot of great ideas, but everything she said was brought back to the energy drink she wanted to sell. Eventually, I looked right at her and said “ This product really isn’t going to fix the problems you just identified. But, I’ll hire you on the spot, right now, to be my health and wellness coach”. She immediately shook her head, and continued to insist that taking XYZ product would solve my issues. I explained to her that I wasn’t interested in the company, I was interested in her, but she would not budge. Her final statements to me included “Well, why don’t you take a few samples and think it over.”

Here’s the thing. She had a lot of great health insights, and is someone I gladly would have worked with as a health/nutritional consultant, or even a personal trainer. How much would I have been willing to pay her for that kind of service? A lot more than what she would have gotten paid for the energy drinks. Probably 10 to 15 times more. But, she couldn’t see it. I told her, multiple times, that I’d pay her more to have a different type of work arrangement, but it didn’t go anywhere.


What’s the Point?

This situation highlights the fact that for every MLM out there, in any industry, there is a business you could start with an equivalent skillset. Looking into health and wellness? Become a nutritional coach or personal trainer. Want to work in makeup and skincare? Be a makeup artist or skincare consultant. From interior design to hairdressing, ultimately you can become a “consultant” in whatever industry it is you are looking into.  And while starting any type of business involves taking some risks, the odds are very good that you’ll be better set up for long term success than you would be by joining the equivalent MLM. Take it from me – being your own boss for in a real business is awesome.  It’s a lot of hard work, but if you have the drive and passion, I have all the faith in the world that you can make it happen for yourself.  If, that is, you prepare appropriately.


If you’re still unsure of how to start a transition like this, you can download my (brand new!) guide on How to Quit a Job You Hate to help you be as ready as possible to take the leap. Still have questions? I am more than happy to chat with you. Feel free to contact me and we can set up a call!

Why Financial New Year’s Resolutions Don’t Work

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“What’s it like to work with a financial planner?”

It’s a question I get asked all the time.  When most people think about a stereotypical “financial planner”, they tend to immediately think of an investment manager.  The conversations focus solely on investment management strategies, how to “beat the market”, and sometimes life insurance sales.  

While any good financial planner will touch on investments and insurance as part of a comprehensive financial strategy, this isn’t what working with a (good) financial planner is like, at all.  

How do I describe what I do as a financial planner?  Quite simply: I work with my clients and their finances the same way a personal trainer works with someone at the gym.  While we work with different subject areas – trust me, you don’t want me giving you physical fitness advice – personal training and financial planning have the same three key job requirements:

Help you get clarity on what you want to achieve. In the gym (and in everyday life), it is important to define exactly what you are looking to get out of the experience.  One of the most important steps in creating a financial plan is taking a step back to reflect on what’s most important to you in your life, and defining specific financial goals to help you realize that vision.  A personal trainer can’t help you improve your race time unless he or she knows whether you’re trying to run a 3k or a marathon. The same applies to your finances!

Develop and implement an effective way to get from Point A to Point B. Just like with physical growth, this process is different for everyone. It is important to ensure that the methods you establish to help you save money, pay off debt, or make other financial changes are effective for your life in a way you can consistently stick to. It’s vital to follow the most efficient path from where your finances are now to where you want them to be in the future.

Hold you accountable to your best intentions. This is the tactic I find MOST important, as I see it to be the biggest deal-breaker in whether or not you find success in the financial plans you make. Individuals who invest in personal trainers at the gym often see more consistent and continued progress than those who do not. Why? Because they make a commitment to the personal trainer that they will show up to the gym regularly, and because the trainer will be able to tell if they haven’t been making progress. I want to spark that same level of motivation in my clients when it comes to financial responsibility. I do what I do because I want to make sure that they show up for themselves and can move things forward at the pace they want to see.

If you want to learn more about the benefits of having a financial “personal trainer” and how I can help you get on track with your financial goals, contact me and we can set up a free introductory phone call!

Now, in order to stay true to my word and hold you accountable, I’ve got to ask…

How are your New Year’s Resolutions going?

If they’re still going strong, congratulations! It is not an easy feat, and you’re one of the few who have successfully carried their New Year’s transformations beyond January. But if you are like most people, your resolutions probably haven’t been top of mind for a few weeks now. In this post, we talk about why New Year’s Resolutions, particularly financial ones, do not work for most people and what you can do to make sure you actually make financial progress in 2019.

Why Most New Year’s Resolutions Fail

Statistically, over 75% of people give up on their New Year’s Resolutions by February 1 — and that is for ALL resolutions. Resolutions specifically relating to money are often the hardest ones to keep.  Aspiring to make improvements to your financial situation is a great goal, but unfortunately New Year’s resolutions are typically an ineffective way of doing so. Why?

Financially, January (and December) tend to be the toughest months of the year.

Coming out of the holiday season, many individuals are stuck with large bills to pay from all of their gift-giving and travelling. If you can relate to this feeling, know that this is 100% normal.  But if you start preparing now, next year can be much more manageable! Starting to make changes in your finances before you’ve paid off your holiday credit card bill can be disheartening. What’s more demoralizing than starting new financial habits, making some improvements, and then logging into the computer later that month to pay a massive credit card bill? You’re much more likely to stick to a goal if you can see a few “quick wins” early on.  

To add to that, if we simply look at basic human psychology, we see that people tend to stress over financial losses much more than celebrating gains. Case in point: when I talk to clients about their investments, they often quote investment gains as a percentage – “My account is up 6% this month” – and they quote discussions about investment losses in dollars – “My account is down $600 this month”.  The reason? The losses feel more real to us. Psychology tells us that we often need to gain $2 to emotionally recover from a $1 loss. Because of this, those post-holiday spending bills can make it harder to see the positive progress and can dampen the motivation to continue towards your goal.  

January 1 is really just another random date.

If we look at it logistically, there is no difference between January 1 and any other date on the calendar. We often feel more motivated to makes changes at the beginning of the year because we feel like we are “supposed” to, but this self-motivation doesn’t last. Once a few days go by, we often lose the motivation brought on by the start of the calendar year, and January 7th feels more like December 7th than January 1st. At the end of the day, your self-motivation to make changes at the New Year is probably the same as at any other point in time.. There’s nothing wrong with starting on New Years if you’re ready, but if you’re not, don’t feel pressured to!

January is a difficult month in general

In the days and weeks following New Years, many people are still coming off of their “holiday high” of time spent celebrating and relaxing. Getting back into work and the stresses of regular life can often put a strain on individuals that greatly decreases the motivation to stick to resolutions. Lots of people tend to cave and give in to guilty pleasures (I can’t say I haven’t done this as well), which can throw you off track or cause you to stop altogether.

How to Set Financial Goals that Actually Work

Because of these things, many people procrastinate, become frustrated, or completely give up on their financial resolutions by this time of the year. However, this doesn’t have to be the case! Here are some strategies to set financial goals that actually stick.

  • Set your goals NOW.  The beginning of the year (or month, or week) is an arbitrary start time.  Why wait when you can act on your best intentions now?   
  • Be specific. Understand what is really important to you, and why. When speaking to clients about this, I love to dive deep into the “why” behind the changes they want to make; it exposes the motivations and can create a driving force for that individual. Once you think you’ve figured it out, ask yourself “why” one more time. You might be surprised and what you’ll learn about yourself.  Ultimately, this is important because the reasons behind the goals you set will be what compels you to stick with them.  “Self-motivation” doesn’t always work in the long term, but focusing on why you want to make a change works incredibly well.
  • Break down your goal into small, manageable steps (and focus on the first step!) For example, if your goal is to buy a home, break it down into subgoals: figure out how much you can afford, review credit reports, talk to multiple mortgage lenders, etc. By doing this you can create a timeline that is actually doable; and not only that, but by focusing on one small step at a time, you can make a daunting challenge seem much more manageable. Simply focusing on the first step along the way makes your goal much more realistically achievable and can get you excited about tackling that task.
  • Set SHORT deadlines. After you break down your goal into steps, set deadlines that encourage you to act now! Whether that be a week or a month (no more than that), setting short deadlines will keep you focused on the task at hand and actually accomplish what you have set out to do. Oftentimes, setting a deadline too far in the future, or not setting one at all, can lead to procrastination and avoidance. And when that happens, you’re back to facing the same problem you had when you set your New Year’s Resolution.
The Biggest Motivator

All these steps will help, but perhaps the biggest piece of advice for those of you out there struggling to stick to your financial goals is to find an accountability partner.

Whether that be a friend, family member, or coworker, having someone else to check in on you consistently and ensure you’re on track is the best way to keep motivated. Remember, while some people have a lot of success keeping up an exercise program on their own, it’s the people who hire personal trainers who see the best results.  Part of this has to do with the plan they help you develop, but personal trainers keep you accountable and make sure you’re doing the work week in and week out.

The same is true for finances. I am here to help guide, support, and keep you on track – but it doesn’t necessarily need to be a planner, either. Our friends, coworkers, and family members can be great accountability partners as well.  Now go find that person in your life, and set your goals together!

If you would like help refining and setting your goals to start NOW, and getting started on making real changes today, I am more than happy to set up a free introductory call with you. If you’ve already got a few, let me know what your goals are in the comments below!

Can You REALLY Get Public Sector Loan Forgiveness?

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Fears about the long-term viability of the Public Sector Loan Forgiveness (PSLF) have surrounded the program ever since it was established in October 2007.  In fact, we’ve discussed these concerns on the blog before!  But since we last discussed the future of PSLF, the initial round of forgiveness data seems to validate a lot of the concerns I last discussed in 2017, as the vast majority of applications for forgiveness were rejected in 2018.

That being said, most of this fear is misplaced.  There are three primary requirements you must meet in order to achieve loan forgiveness under PSLF – and unfortunately, the “fine print” is confusing for each of these three requirements, and the needed information historically hasn’t been clearly communicated by federal loan servicers.

At the end of the day, PSLF is a viable option for you – as long as you make sure you meet the three requirements, to the letter.  And despite scare tactics put out by companies that make money when you refinance your student loans – which, incidentally, will disqualify you from PSLF – borrowers who are currently in repayment are not threatened by any future changes to the PSLF program.

If you’d like to learn more about how to make sure your loans are on track to qualify for PSLF, download our free Student Loan Guide to learn more!

What is Public Sector Loan Forgiveness?

Before diving into the loan forgiveness provisions of PSLF, I want to give you some background on the Public Sector Student Loan Forgiveness program as a whole. This program was created to encourage citizens to pursue government jobs in exchange for loan forgiveness –the main selling point being that working in one of these jobs for 10 years would qualify you for complete loan forgiveness.

Unfortunately for the government, the PSLF program has essentially been too successful; not only did individuals in many different fields pursue these types of jobs in government in search of the benefits this program offered them, but a growing number of graduate and professional students accepted jobs at teaching hospitals and other non-profits seeking forgiveness for 7+ years of student loan borrowing.  The government didn’t intend to open this program to the volume of people currently seeking loan forgiveness, which has prompted several proposals to change the program over the years.  Critically, though, these changes will only affect future borrowers. If you are currently repaying loans seeking PSLF forgiveness, this should not be a cause for concern.

What Problems Face the PSLF Program?

When this program was first launched, the specifications and requirements for forgiveness were very vague and poorly communicated.  Additionally, Congress and the Department of Education have made significant changes to student loan policy several times over the past 15 years.  All of these changes were well-intentioned, but they made it hard for borrowers to keep up to make sure they had the right loans to qualify for PSLF forgiveness, and that they were on a qualifying repayment plan.  This particularly affects borrowers who had taken out student loans prior to 2010.

Unfortunately, the changes in student loan policy and poor communication of the requirements to applicants meant that almost 100% of people were rejected for forgiveness the first year it was offered.  And the fact that loans only started to be forgiven over the past year and a half is enough to raise concerns about the program by itself, at first glance. It is important to note, however, that this program began in October 2007. Because of the 10-year forgiveness requirement period, the first round of applicants eligible for forgiveness only submitted their applications a little over a year ago. To potential applicants for the program, seeing that the rejection percentage was so large and the total number of people who have had loans forgiven was so small, it’s completely understandable that  individuals are afraid to count on the application process altogether simply because they associate the program with failure.

But, here’s the catch: the PSLF program is not a failure, and it won’t be for anyone currently seeking loan forgiveness who reviews the detailed program requirements  PSLF is still in its early stages and there are many reasons to expect that the program will be successful for you in the coming years:

  • This is a blessing and a curse, but the government has only rejected applicants because their loans, payments, or jobs did not meet the requirements for forgiveness. Unfortunately, due to the poor communication about the program requirements, many individuals who thought they were eligible for PSLF actually were not. But the good news is that if you do make sure you comply with the “fine print” requirements for PSLF, you can expect loan forgiveness. With my help, we can ensure that you are meeting all the requirements for eligibility and are set up on the right path towards success.
  • Many people experience issues with the student loan servicers that process the payments. These companies often make a lot of mistakes processing loans that can incorrectly calculate your monthly payment or put your eligibility for forgiveness at risk. For the average millennial, it’s very difficult to identify and fix these potential issues.  With the help of a student loan planner (like me), this can be much more manageable.
  • I expect the number of accepted PSLF forgiveness applications to increase significantly in the coming years.  As I mentioned, the government did a terrible job getting people the information they needed to know how to qualify for the program.  That has gotten better over time, and it’s much easier for students who entered college in 2011 or later to have loans that automatically qualify for the program.  Just because so many people have been rejected in the first year or so of forgiveness applications doesn’t mean this will continue.
How Can I Make Sure I Get Loan Forgiveness?

Despite what you may have heard, qualifying for PSLF can be MUCH easier than many think… you just need to do your homework. Student loan policy has developed over time, and the changing options mean that additional steps may be required to maximize your likelihood of forgiveness.  If you focus on meeting three key requirements, you can feel good about your chances of achieving loan forgiveness.

As long as you make sure you are on track through each step, attaining forgiveness through this program is possible. I have laid out the three major steps you need to take right from the start to optimize your possibility of public sector loan forgiveness:

  1. Make sure your loans are eligible. The biggest myth around PSLF, that gets the most people into trouble, is assuming that every federally-issued student loan qualifies.  Not every type of federal loan qualifies for Public Sector forgiveness, so you should review your loan documents to verify. If the loans you currently have were distributed before 2010 (these type of loans are classified as “FFEL loans”), or are categorized as Perkin’s loans, you will need to consolidate them through the federal government to make them eligible for PSLF.  For those of you who have not yet started repaying your loans, be sure to check that your loans meet the eligibility requirements
  2. Make sure you are on an eligible payment plan. Often, individuals don’t realize that the payment plan they are on may be hurting their chances of loan forgiveness or reducing the amount that will be forgiven. Critically, you won’t get credit for any time where any of your loans are in deferment or forbearance.  While the Public Sector Loan Forgiveness program is often associated with a forgiveness time period of “10 years”, the real requirement is represented as 120 monthly payments.  If you make one payment a month for 10 years, this gets you to the required number of payments… but if you skip payments or place your loans into deferment or forbearance, you need to “make up” that payment in the future before you can apply for PSLF.  Additionally, “graduated” or “extended” payment plans won’t qualify as PSLF-eligible payments, either.  If you are seeking PSLF, you should make sure you are either on an Income-Driven Repayment plan or the standard 10-year repayment plan.  (And as a side note, you should make sure you are on the right Income-Driven Repayment plan.  In my experience, student loan servicers often put you on sub-optimal plans unless you specifically request the “right” one for you!)
  3. Make sure your job is qualifying and eligible. This loan forgiveness plan offers benefits to a wide range of professions, but it is important to confirm that your position qualifies. To be more specific, qualifying jobs include working for one of the following types of organizations:
    1. The Government
    2. A 501(c)3 Nonprofit
    3. The AmeriCorps or Peace Corps
    4. A Public Service Organizations.  Generally, non-profits as a whole will qualify.  But, there are a few exceptions.  Specifically, even if you work for a non-profit, jobs that are political in nature or labor union jobs are not eligible for forgiveness.

Once you understand these three criteria and confirm your eligibility, you can feel confident that you are on track for PSLF.

What is the Future of Public Sector Loan Forgiveness?

As I mentioned, a lot of the fear around PSLF has to do with future changes to the program.  And to be candid, this program is likely to see tweaks to it in the future. Congress has already tried to make changes to this program since the Obama administration, and I believe some new changes will come to fruition in coming years. Both Presidents Obama and Trump have discussed putting some type of limit on how much can be forgiven by the program.

Currently, Republicans in Congress has introduced the Prosper Act, which would completely eliminate PSLF altogether.

However, this is not a cause of concern for people who currently have student loans. This change would only affect new borrowers, not those who are already pursuing forgiveness. These forgiveness provisions are often written into borrower’s loan agreements; it will be a massive legal fight for the government to take these provisions away from current borrowers, and there is strong legal precedent for changes in student loan policy to only affect future borrowers.

So, if you or someone you know is considering going back to school with the goal of achieving loan forgiveness through PSLF once you graduate, this should be a legitimate concern. But otherwise, there is no need to fear.

The Key Takeaways

From all this information, there are two big takeaways:

  1. Public Sector Loan Forgiveness is very attainable as long as you do your homework and stay on track. Take the time to make sure that your loans, payments, and job qualify for the program.  And each year, you should recertify your income and file the Employment Certification Form to prove you work in a qualifying job.
  2. Recognize the conflicts of interest in the student loan industry.  As I mentioned at the beginning of this post, I was inspired to discuss the fears about the future viability of PSLF am discussing this topic mainly because of an article sent to me by a private student loan refinancing company.  Ultimately, this is a pretty good overview of the program, but the section in the middle calling PSLF into question is misleading and intentionally stokes fear about the future of the program.  Remember, this company is a private student loan lender, meaning they make their money by taking loans eligible for PSLF and refinancing them into ones that aren’t. As long as you follow the PSLF program requirements, there is no need to be concerned about achieving forgiveness through the program.  And above all, if you’re seeking PSLF forgiveness, don’t refinance your loans!
What’s the Next Step?

If you would like to learn more about this program or your eligibility, I encourage you to download my Student Loan Guide to give you some help in determining whether or not you are on track to qualify for PSLF. I am also more than happy to set up an introductory call to walk through any questions you may have!