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I respect entrepreneurial spirit but my respect evaporates when people use their talents to knowingly peddle snake oil.

Why Are Hot Young Instagram Babes Using MLM to Sell Shady Personal Finance Products?

I’m used to pretty Insta-people hawking all sorts of things that will never, ever make my face more symmetrical—but what’s the deal with the recent trend of influencers selling financial products?

This week’s question comes from Patreon Donor Mara. Their question prompted a lot of deep thought about the aspirational nature of wealth, and our complicity in that paradigm. It’s self-recriminatory af, you’re gonna love it. 

Mara writes…

I’m writing to ask if you guys had any thoughts on all these Personal Finance Flavored MLMs that are popping up like crazy on social media.

I work in the entertainment industry. Recently I’ve noticed that a lot of young actors are selling “classes” and the like on their Instagram pages. It seems like they really target young artists/musicians/models and tell them that selling Forex or Bitcoin is the key to intergenerational wealth and stability.

It seems super sketchy and predatory to me, but I would love y’alls thoughts.

– Patron Mara

What’s an MLM?

Wait. Have we truly never talked about this?! How is this possible?

Okay, clearly we need to make that right—please expect a deeper dive on MLMs in the future. But for now, let’s keep it quick and dirty.

All you really need to know is that MLMs are life-ruining scams run by soulless, scum-sucking bottom feeders, kept alive on a steady diet of the misplaced hopes and dreams of sad dupes you went to high school with who suddenly wanna “reconnect” and get you involved in their exciting new “business opportunity.” UGH fml.

But here’s a moar properer definition: multi-level marketing (also called “network marketing,” “direct sales,” or “network sales”) is an unstable, predatory business model where a few people at the top of the company take money from a lot of people at the bottom of the company. They support themselves by pressuring their members to vampiristically infect new rubes for unsustainable, empty growth.

Like one of those good Christian gals who clings to the technicality of her virginity by limiting herself to premarital *anal* intercourse, these companies narrowly avoid the definition of an illegal pyramid scheme by throwing in some kind of actual merchandise. Shitty makeup (Avon), worthless nutritional supplements (Herbalife), and random overpriced knickknacks (Amway) are popular choices. It’s all crap, but it’s real crap! They sucker desperate people into buying the crap, but the real financial titty-twister is the host of expensive courses and classes and conferences and guides on how to resell the crap. It’s all centered on recruiting more and more people into the cult family!

John Oliver has an excellent longer overview, for any interested parties.

So what are these financial MLMs?

There are some big financial services companies that fit the textbook definition of an MLM. Primerica, Transamerica, World Financial Group, and Xifra are among them.

But overall, the more popular breed has become exactly what Mara describes: budding investment gurus selling financial education of dubious origin and quality. They’re pretty easy to spot.

  • Influencers are fresh-faced smoke shows.
  • Always seem to be lounging beside a pool, leaning against a nice car, or tapping thoughtfully at a laptop in the lobby of a very swanky hotel. (It is unclear how they got to those places, or if they actually own any of those things.)
  • They’re selling courses on vague topics involving personal finance, investing, and entrepreneurship.
  • They use a lot of the same aspirational, goal-oriented language employed by MLMs about “becoming your own boss” or “finally taking control of your life.”
  • They make it sound like whatever they’re doing is a wonderful, accessible secret shortcut to wealth.
  • Top comments are from clumsy, obviously inauthentic bot accounts citing insane ROIs and praising their amazing investment know-how.
  • The hashtags probably include some combination #bitcoin, #cryptocurrency, #forex, #daytrading, #digitalcurrency, #investor, and DEFINITELY #girlboss. (Also big fans of adding -life and -lifestyle to the end of all their hashtags.)

So what gives? What are these?

I’m actually pretty interested to know. Thanks to our Patreon donors, we have a small budget set aside for research. I considered using it to explore the upper warren of the rabbit hole. But I ultimately decided it wasn’t worth it to perpetuate the practice, and potentially invite a dog pile on just one influencer when it’s truly an endemic problem.

… Plus we recently used our research budget to buy the most expensive AND disgusting Oreo knock-offs known to mankind. Can’t do our Patrons dirty too often.

What I think is going on…

One of two things is likely happening.

  1. They’re selling someone else’s product, which makes them an affiliate. For every X people who sign up using their link, they get Y dollars (or Bitcoins) back.
  2. They’re selling their own product, which is likely to be some kind of program or course.

A lot of influencers make their bread by selling courses. And that’s fine! Low-cost, non-collegiate education rocks, and good teachers are worth their weight in precious gemstones.

But there’s definitely a dark side to the whole enterprise.

Piggy and I went to the same arts and communications-focused college. So we have an unusual number of close friends who are (or were) professional actors and models. Every single one of them—even the super successful ones—has to support themselves with a side hustle. Or three. Being beautiful people who know exactly how to ride the aspirationally-confident-yet-relatably-vulnerable line, they’re naturals at selling yoga instruction, skincare products, and the like. Blessings upon them for figuring out how to make a living in an industry that’s so unforgiving.

… But my respect for that hustle evaporates the second those people use their talents to knowingly peddle snake oil, or pretend at having expertise when their ignorance puts others at risk.

I’m fine with people selling courses that pertain to their areas of skill. Beyond fine, actually—I think it’s fantastic. But only the morally bankrupt would accept money to misrepresent themselves or mislead others. Which is exactly what I think is happening here.

The seedy underbelly of personal financial courses

Now, here’s where it gets tricky…

In some areas—including personal finance—you see people make and sell courses on *how to make and sell courses.* There’s a lot of popular bloggers who will charge you thousands of dollars to learn the secrets of blogging. Same goes for podcasters and social media influencers.

And that don’t sit right with me.

Something about it has a distinct skunky funk of MLMness without actually being an MLM.

We have subtweeted this practice extensively, but we haven’t spoken about it directly, because in this particular area, we’re kinda being big fucking cowards! A lot of people we really respect and like personally sell courses, and we don’t want them to think we’re dropping trou’ to take a big wet dump on them. We’re really not!

There’s a responsible way to frame, package, and price truly valuable, wanted entrepreneurial advice. Several of our best Judys in the industry do it! They have the original voices, unique perspectives, and deep expertise to actually connect learners with financial topics so dry they’re mummified. They work really hard to make their courses targeted and helpful, with a price tag that doesn’t ask too much of their audience.

But there’s an irresponsible way to do it, with advice that’s unoriginal, un-insightful, overpriced, and more aspirational than anything else. Our industry is full of ’em. That’s why we’ve avoided it. But Mara’s question inspired us to state our perspective more clearly.

Are there any good personal finance courses?

Yes. Absolutely. And we plug the good ones fairly frequently on the sosh meeds. (Hint hint, give us a follow!)

It’s pretty easy to tell if a course is gonna be good.

  • Does your educator have a large body of work you can read through to get a feel for their general philosophy and knowledge base?
  • Have they offered previews of the course, or a free introductory module?
  • Do they recommend practical, conservative approaches firmly grounded in the realities of this ugly world we live in?
  • Have they built your personal confidence in making independent choices, rather than blindly following one rigid system?
  • Do they encourage diversification at every opportunity?
  • Are there comments from satisfied customers? (And are those customers actual non-bot humans?)
  • Can you afford it? And is the price fair for the knowledge you expect to receive?
  • Do they offer low-cost or no-cost scholarships to deserving folks?

There are a lot of people who tick most or all of those boxes.

Are y’all ever going to offer courses?

Sure. We’ve considered it.

It’s likely something we will do, if Piggy remains self-employed and our Patreon donor base doesn’t grow as quickly as we need it to. Although so far y’all are COMING THROUUUUUGH! We can’t thank you enough for the support, donors!

Regardless, we’ve done a ton of thinking about how we would do it in a way that feels fair. After all: if our motive is to help poor people, doesn’t charging money work against that? Sure, our advice is good, and our time is valuable… but our passion burns brightest when we’re arming vulnerable people against financial ignorance and exploitation. And we’re wise enough to understand that unless you’re starving, true passion’s rarer and more valuable than money.

If we were to ever offer courses, we’ve decided it would be on topics that only interest people who already have pretty good financial stability, such as buying your first home, or making strategic late-career moves. With topics like that, the right piece of advice can save you tens of thousands of dollars and years of heartache, so we wouldn’t feel ashamed to attach an affordable price tag. And it would appeal to our more established fans only, so there wouldn’t be any pressure on The Young And The Broke to cough up money they don’t have.

We will never, ever put up a paywall between our most vulnerable readers and our best possible advice to them.

So as someone who’s thought A LOT about the ethics of a product we *haven’t made and don’t even sell yet,* I guess I have high expectations from others! I don’t understand how someone could not know they’re taking advantage of people—or know it, and be okay with it. Which is all I see with these cryptocurrency jabronis.

The secret is there is no secret

If someone you follow on social media is trying to sell you “one cool trick” to wealth, I urge you to smash that unsubscribe button. Especially if they’re weirdly focused on just one vehicle—like cryptocurrency, forex, or life insurance.

Because I haven’t taken any such “courses” myself, I cannot say with 100% certainty that these courses are worthless self-serving garbage only a morally bankrupt degenerate would leverage their beauty and popularity to sell. But feel free to read intent into my strategic use of bolded fonts!

Here’s what I do know: ain’t no Konami Code for making money. The whole point of wealth is that it’s hard to accumulate. There’s no easy mode, no exploitable glitch, no secret path hidden behind the waterfall.

You’re born with a set of randomly generated privileges that can make acquiring wealth easier: wealthy parents, access to a great education, an entrepreneurial spirit, white skin, being a very tall cisdude, and so on. But even so, it’s not easy for anyone! Our Dear Leader Donald Trump (long may he reign… in hell) had all of those advantages, and still managed to dig himself so deeply into debt that a baker’s gross of investigative journalists haven’t yet found the bottom.

The whole point of acquiring wealth is that it’s hard. If it were easy, it wouldn’t be such a singular obsession in our culture. We wouldn’t dedicate half our waking hours to it. There’s a reason there are thousands of personal finance blogs, and not many breathing, blinking, or chewing blogs. This shit is rough!

The easiest way to tell

Don’t trust anyone who says they have special secrets, foolproof systems, or proven processes to building wealth—especially when those people are also achingly beautiful, tastefully slutty 23-year-old artists.

Nothing against that demographic! After all, Piggy and I were once achingly beautiful, tastefully slutty 23-year-old artists—and we were pretty great with money then too! But it was all relevant to our experiences. Less “here’s a blueprint to decentralize currency,” more “here’s a cheap brand of toilet paper that won’t tear up your bunghole.”

If someone is selling ideas they didn’t create, you have to ask yourself why. There’s almost certainly someone standing outside the frame, using someone else’s good looks and compelling personality to sock-puppet a product that wouldn’t stand on its own merits.

Thanks again to Mara for asking this great question!

We’d love to write more about MLMs in the future. We’re curious to hear about what you would find helpful.

  • Do you wanna know how they work? “Work” being a loose term, of course.
  • How do you avoid them, or deflect uncomfortable invitations?
  • What can you say to a friend or family member who’s been sucked in?
  • Something else?

Tell us what you’d like to know in the comments below!

Ask the Bitches: "Is this the right time to start investing?"

Ask the Bitches Pandemic Lightning Round: “Is This the Right Time to Start Investing?”

Welcome to the Ask the Bitches Pandemic Lightning Round! We’re working around the clock to answer your questions about coronavirus, the impact of quarantine, and the recession of 2020.

Today, we’re considering if now is a good time to start investing. Because your dad probably told you it’s a great time to invest. But is your dad right?!

We’ll be coming at you fast this week, answering as many urgent questions as we can. If you appreciate the extra effort, we would love a small donation to our Patreon. Thank you!

The question

“Dearest bitches, I finally paid off my student loans in January and the money that had been going to them has just been hanging tight in a savings account until I move it to my Roth IRA (right now it’s up to about $2k). The question, then: with the market, to quote a friend, ‘going down worse than your eighth jagerbomb,’ when is the best time to make that shift? It’s going into a robo-managed fund, so it’s not like I’m actively playing the market, but I’m still nervous. Help!”

Ah. Lovely. A slightly more optimistic question than our last few!

We’re going to answer this question straight, with the assumption that you’ve already taken the stability of your job, healthcare insurance, and emergency fund into ample consideration.

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Remember learning about means, medians, and modes in middle school? You're about to understand why they taught that shit to you.

What’s the REAL Rate of Return on the Stock Market?

Our awesome Patreon donors have asked us to tackle a really interesting question this week: what’s the real rate of return on the stock market?

If you ask people this question, you get surprisingly different answers. And for some reason (boredom at my day job) I decided to get all art school with it. Here, I wrote you a one-act play on the topic!

WHAT THE FUCK IS IT EVEN: THE REAL RATE OF RETURN ON THE STOCK MARKET

A Play in One Act

SOME PEOPLE
(With great confidence)
Ten percent!

OTHER PEOPLE
(With low confidence)
Ssssssssssix?

MOST PEOPLE
(In anguish)
Why are you asking me this?! Shit. Am I supposed to know?!

SOME PEOPLE
(Smugly)
It’s totally ten percent. Why would you ever buy a house or pay off debts when stocks are so mathematically superior?

OTHER PEOPLE
Ssssssseven??

MOST PEOPLE
(With self-loathing)
I feel like I’m too busy to know this. But also I made time to watch that Zac Efron Ted Bundy biopic on Netflix, so…

SOME PEOPLE
Don’t even buy a single tube of mascara or a ham sandwich. It’s a waste. It’s unoptimized garbage. I buy nothing but stocks and Soylent!

OTHER PEOPLE
Wait, is this the four percent thing? I’ve heard people talk about the four percent thing. Is it foooourrrr?

DAVE RAMSEY bursts onto the stage.

DAVE RAMSEY
It’s 12% if you follow my system! But I never agreed to be here! My company sends cease and desist letters to people who criticize me!

DAVE RAMSEY exits the stage and the playwright forgets to go back and delete that part.

MOST PEOPLE
(With resignation)
No, you know what? I know that Alleras the Sphinx is actually a lost Sand Snake, and I know three quarters of the verses of Mambo #5, but I do not know what the rate of return on the stock market is and I have accepted that fact about myself.

SOME PEOPLE rubs stocks all over his torso. He visibly nips out. OTHER PEOPLE keeps mumbling random numbers. MOST PEOPLE starts adjusting the Pinterest board for her wedding, even though she is not engaged or seeing anyone seriously.

Rocks fall; everyone dies.

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Learn from the wisdom of the Dark Lord.

The Dark Magic of Financial Horcruxes: How and Why to Diversify Your Assets

Lord Voldemort was the unrecognized Suze Orman of the Potterverse. The man could’ve poured his money into nasal reconstruction surgery, yet instead he saw the value in diversification, making himself harder to kill by spreading his assets out among multiple Horcruxes.

You may not be a wizard, ‘Arry, but today you’re going to learn something about personal finance from He Who Must Not Be Named. For while we’ve already established that the good guys of J.K. Rowling’s seminal masterpiece are fucking idjits when it comes to money, the Dark Lord himself is another matter.

The principle of Horcruxes—dividing Voldemort’s soul into multiple containers so that he could only be killed when all of the Horcruxes were destroyed—is a pretty damn clear analogy for financial diversification.

Diversification, just like the dark magic of Horcruxes, is a strategy for risk management. The idea is to spread your money out into a variety of different investments and savings vehicles to lessen your overall risk should one or more of those investments go the way of Tom Riddle’s diary. Diversification generally helps you yield higher financial returns over the long term and wraps your financial future up in layers of safety you won’t get from sticking 100% of your net worth in a checking account.

You know: exactly like Voldemort’s Horcruxes.

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Can a recession ever be a good thing? No. Full stop.

There’s a Storm a’Comin’: What We Know About the Next Recession

A foul wind’s a’blowin’! There’s evil in the air! A recession is a’brewin’ and you need to be prepared! 

-From “Pay Off Them Debts Before the Recession Comes,” by Piggy Smalls featuring The Kitty Kat Kid, new from Bitches Get Riches Records

Last week we put all your pre-recession fears to rest by explaining how you can arm yourself with strong financial decisions before the next recession comes. To recap:

  • Track your spending. You’ll feel less anxious and more in-control if you have a clear picture of your needs.
  • Fatten up your emergency fund. Let your level of risk set the size of your emergency fund.
  • Pay off as much debt as you can. This will give you more flexibility with your money and reduce your expenses overall.
  • Get a credit card or increase your existing credit limit. Credit freezes up during a recession, so get it now while you still can. Yes, credit is scawwwy and can be misused—but it is a tool that can instantly put food on your table.
  • Get your health in order. Avail yourself of healthcare access while you have it, and stock up on needed prescriptions.
  • Identify areas to cut back before you have to. The less money you spend every month, the less money you need to get by. The less you need to get by, the easier it’ll be to pay your bills if you lose your source of income.
  • Broaden your skills. Start doing whatever you need to make your resume stand out in a more competitive job market.
  • Back up your work files. You don’t want to lose potential portfolio pieces.
  • Stay the course. Don’t freak out and pull your money from the stock market.
  • Be kind. A time is coming when we’re going to have to depend on each other. No one wants to help out an asshole when times are tough.

So praise be, we know what to do! But what exactly is going to happen? And when?

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What about that 800 point drop the Dow Jones experienced just last week? Yes! Let's address the steroid-addled gorilla in the room!

Investing Deathmatch: Investing in the Stock Market vs. Just… Not

It’s time for another thrilling episode of… INVESTING DEATHMATCH! In which we pit two forms of investing against each other and see which one escapes the struggle unscathed.

Today’s fight is an ancient grudge match between two opposing philosophies: extreme caution and risk-taking. In one corner we have investing in the stock market—an inherently risky proposition but one that comes with untold rewards. In the other, we have the option of the risk-averse everywhere: just… not with the stock market, and instead, playing it safe by sticking your money in a savings account.

It occurred to us that we needed to cover this battle to dispel some incorrect assumptions about money management.

After the Great Recession and stock market crash of 2008, a lot of young people coming of age in a new and fragile economy were scared away from the stock market. They saw the grownups around them ruined by plummeting stocks and improperly leveraged debt.

As a result, millennials are statistically less likely to have anything invested in the stock market—whether it be through a retirement fund or a managed portfolio. These younglings are choosing to play it as safe as possible.

But is that truly the way to win this Investing Deathmatch?

Fighters… TAKE YOUR CORNERS!

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Investing has the reputation of being mysterious and intimidating. It’s something for older, more worldly, bebuttsticked captains of industry, not lowly millennials trying to make their way in a hostile economy. But like the president's reputation as a deal maker, this characterization is a complete myth.

Investing Deathmatch: Paying off Debt vs. Investing in the Stock Market

LET’S GET READY TO RUMBLLLLLLLLE!

It’s time for another thrilling episode of Investing Deathmatch, in which two forms of investing enter the ring, and only one leaves victorious. Or, more accurately, we decide that investing is a far more complicated affair than wrestling and the outcome of the fight depends on a number of nuanced factors.

But I digress.

TO THE BLOOD SPORT!

This fight has a long and sordid history. We’ll be uncovering old wounds, dredging up arguments long held in stalemate. We’ll be discussing a topic about which every damn personal finance blogger on the Internet has a very firm opinion. And we’ll be demystifying an age-old enigma of financial independence.

Brawlers, take your corners.

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Let's get down to the EXTREMELY ANALYTICAL CARNAGE.

Investing Deathmatch: Traditional IRA vs. Roth IRA

Two methods of investing in the stock market enter the ring.

Only one will leave victorious.

Welcome back to another installment of… INVESTING DEATHMATCH!!!!!!!!!

If you’re one of our Patreon supporters, there are four things I know for sure about you. One: you’re beautiful on the inside and out. Two: you’re powerful, also on the inside and out (like, you are spiritually intimidating and also extremely muscular). Three: You have excellent taste in blogs run by women who are emotionally in their mid-seventies but physically in their early thirties.

The fourth and most important thing I know about our Patreon supporters is that once a month, they get to choose a topic for an upcoming blog post. And this month they selected a battle royale between traditional IRAs and Roth IRAs.

So if you enjoy this week’s post, you have our gorgeous, strong, good-taste-having, democratically-empowered Patreon supporters to thank for it. Please consider becoming one, or continue to aspire to grow up to be one.

So real.

Now let’s get down to the EXTREMELY ANALYTICAL CARNAGE.

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Hogwarts Arithmancy classes clearly do not cover compound interest.

When Money in the Bank Is a Bad Thing: Understanding Depreciation Expense

Here’s a riddle: when is $100 worth $97? 

The answer is: when you put it in the bank a year ago.

Being frugal and being money-savvy are actually two very different skills. The former requires self-discipline, planning, and a strong sense of the relative importance of resources. The latter relies more on understanding how to take advantage of existing financial systems, economic regulations, and mathematical quirks.

Think of it this way: a frugal person packs their own lunch, whereas a money-savvy person itemizes it.

Depreciation expense is one of those mathematical quirks. It sounds tricky, but it’s really not! And if you know how it works, you can make it work for you.

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