I wrote this post as a comment on J.D.'s blog, Get Rich Slowly. He did a post on Multi-Level Marketing, and it really touched a nerve with me. After spending 45 minutes on my comment, I decided to make it into an actual post.
I started tracking personal finances last year, when I quit my job to be a stay-at-home mom. I had to do it; we just couldn’t make it otherwise. But, the other motivation was that I did not want to be like my parents. I am naturally cautious, so I haven't, up until now, gotten into the specifics of my family's financial follies. It still makes me nervous to talk about it, but I hope that it might warn others away.
My parents are really terrible with money, and they’ve always complained about being poor and in debt, but the truth is they have spent thousands of dollars in bad business ventures throughout my lifetime. They did Amway, Melaleuca (still do), some Rain Forest thing, and my mom sold MaryKay and Avon products. My mom started two real businesses that lasted only a day (a $10K loss each time) and has spent almost $20,000 on schooling to be:
Yet she doesn’t even have an associate’s degree — they were all certificate programs. And she barely made a profit as a realtor, because she is so shy, she can hardly talk to strangers at all!
The worst one she did was selling a fake “miracle” machine. You took a drop of blood, put it on a piece of paper, and FAXED it to them. Then they took crystals out, diagnosed you, and sent you the results. Of course, since the illnesses were fake, it was easy for the machine to “cure” them (most people were diagnosed with both cancer and AIDS/HIV). But they bilked people for $1800 a machine. A lot of these people were elderly and sick. And, though my mom made a lot of money in this venture (all under the table, I might add), she also lost a lot (she gave one woman alone $5000 for “off-shore stocks,” without getting even a receipt, let alone a stock certificate).
I was overseas for much of this one, but when I got home and realized what was happening, I called the cops on the company - the attorney general’s office was searching for their base of operations, and the local news had done an expose on the scheme. I told my parents I had notified the police (before they raided, I might add, but my mom still refused to accept it was illegal), and luckily my mom fell and twisted her ankle and couldn’t go to work the day the police came, or she might have done time. I have never seen my father more furious with me in my entire life, though, than when I told him I had called the cops on the operation. He just couldn’t see what was happening — to him, it was his “last chance” to get the easy life, never mind the morals. For myself, it was one of my lowest points; I was terribly disappointed in both my parents.
My parents are 58 and 62 now, and they’ve finally seen the light and are going to a real financial counselor. They are saving money, investing in index funds, and paying off debt. The sad thing is that, even though they’ve found what works, they have less than $10,000 saved for retirement, with my father only 7 years away from retiring.
Don't fall for the schemes. As J.D. writes in his post (it is the name of his blog, after all), it's better to Get Rich Slowly. And that, I'm sorry to say, is the truth of the matter.
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