I almost fell for a Pyramid Scheme


Photo by Austin Distel on Unsplash

How was I so stupid?

Okay I might have stretched the truth a little bit. I didn’t almost fall for a Pyramid Scheme, I was almost recruited into an MLM (Multi-Level-Marketing). Pretty much, a Pyramid Scheme that just barely fits within the loopholes our legal systems have.

Let me tell you the story. I’d just applied for a job I’d seen online (I’m looking for a bit of a career change) and the Job description was pretty cool. B2B Marketing and sales with leading clients around the country. The successful applicant would be in charge of helping boost sales for one of their clients. The whole job was focused around helping clients boost sales and there was a lot of training offered as well as great upward momentum. I wrote up a cover letter and sent that off with my resume and not 1 hour later I had a missed call, a text message and 2 emails from them. Sounded great. I pumped my self up in the car ready to call back and the first RED FLAG!

She answered the phone with, “Hello?” . . . . Not, “Hello this is Blah blah from woop woop how can I help you.” Just a measly, “Hello?” So we got passed that and she talked about a few things about my profile she wanted to update before we move further along in the process and then asked if I’d be able to come in for an interview some time soon. I agreed and she said that tomorrow there were 3 sessions. Second RED FLAG. I agreed to come in in the afternoon and that was the end of the phone-call.

Wanting to prepare for my interview the next day, I decided to do some research about the company on a website called glassdoor.com. (I highly recommend this site to anyone looking to research their future jobs) Most of the reviews were pretty good and happy go lucky but the bad reviews tipped me to become very sceptical. A few reviews on that website mentioned that this company was a Pyramid Scheme which they so vehemently defended against claiming that they couldn’t possibly be a Pyramid scheme as those are illegal. It turns out that this job I was applying for was an MLM where the bottom of the chain sold raffle tickets on the streets and in shopping centres. A far cry from what the job description said.

I then inspected their website and that only confirmed my worst fears about them. On every page they talked about their goals, their achievements and how you can join the team. Their entire website was geared around getting people to come work for them and nothing, I mean absolutely nothing was said about the services they provide. Not a, “We can be your marketing solution,” or , “Contact us for a free quote about our sales and marketing solutions.” It was all, we are so good, we make lots of money, if you want to make lots of money then join us too! Nothing, about the services they provided. Which really cemented the fact that the lady I had just spoken to on the phone was really trying to recruit me into an MLM or Direct Sales or Community Sales or however they try as they might to cover up the dirty name of MLM.

LiveChat Partner Program

What the F*** is an MLM?

The above image should be information enough. An MLM is a company that has a product or a service that they sell, but instead of more traditional methods of sale, do the above. You buy into an MLM for a small start up cost and you are given items to sell to customers, but anyone who is worth their salt will realise that you can’t make much money selling products for an MLM. Instead, you recruit people below you to sell the items for you. You buy the item from your superior and then sell it to your recruits at an inflated price. They can then do the exact same thing you just did. Recruit someone to sell the items for them. They buy it off you and sell it to their recruits. So you buy it off your boss, sell it to your recruits and they sell it to their recruits and they sell it to the public. Hey presto, that’s MLM. As you can see the money isn’t made by selling the product to the public, the money is made by having as many people working under you that you can. The moral problem with this though is that the person at the bottom is nearly always going to be running at a loss unless they recruit people.

There are a lot of articles, forum posts and videos all over the internet talking about the risks and dangers of MLMs and what exactly they entail. John Oliver does an excellent segment about it if you have the 30 minutes to spare watching it.

MLM can be done in a legitimate way but there would need to be a few changes. Firstly, work based 100% on commission is pretty shady, especially if you are selling low cost products. For my opinion to change on MLM’s there would need to be a base rate plus commission. Secondly, the focus of the entire business shouldn’t be centred around getting more recruits to sign up to the MLM, it should be about selling the product that is on offer. The MLM part of it should be an afterthought as a marketing avenue.

Just Quickly

If you are ever approached by or accidentally apply to what you suspect is an MLM, make sure you do your research about the company, what products they are trying to sell and what training they offer as well as any fees that may apply. Usually they won’t tell you about any of the fees until after they try to hard sell you on becoming part of the team so look that stuff up online. People can be successful in MLMs, it’s not a complete scam. It just isn’t what it appears to be on the surface and morally I can’t bring my self to support them or work for them, even if they offer valuable experience and growth. I can’t morally agree with a business structure that leaves the bottom rung of the ladder out of pocket most of the time.

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Disclaimer

This post contains affiliate links.

Are you Rich or Poor? The dangers of lifestyle creep.

It’s all about how you think.

Morning break conversations are where it’s at. What is the meaning of life? Have you heard about the current world politics? How are the kids? Did you hear that Barry Gary just quit? It’s a really great small chunk of time in our day where for a small time we can have absolutely meaningless discussion or deep and thoughtful conversation.

So this mornings conversation with my coworker stretched from religious freedom to work life attitude and eventually money. He quoted Warren Buffett (A quote which I don’t have much time to validate) and said, “It’s all about how you think. If you make $10 and only spend $7, and another man makes $100 and spends $101 dollars, which one is rich?” Obviously the answer is the first man with a surplus instead of the second man with a deficit. This is stuff that I already know about, but it’s nice to have a reminder every so often to keep an eye on lifestyle creep.

Lifestyle Creep

Sort of like a real creep only lifestyle creep doesn’t take photos of you on public transport. Lifestyle creep occurs when we start to have access to more money either through savings, a promotion at work or paying off a loan. We start spending more money on things that we used to consider a luxury but now consider it a right. It’s things like a more expensive bottle of wine on Friday nights, more expensive clothes or a TV cable channel. The point is that lifestyle creep when left unchecked can spiral out of control until, even with more money, we save less than when we were making less money. Luckily for me my luxury is my tin of Milo and I make sure to keep that in check.

Lifestyle creep can mean we don’t have enough money in savings or to invest in assets. A US Federal Reserve report in 2017 stated that 4 in 10 Americans Adults couldn’t produce $400 in the event of an emergency without selling something or sliding into debt. That’s nearly 80 million people and or their families. That’s just over 3 times the population of Australia that are financially unprepared for an emergency, both low and middle income earners.

Finances are an important part of our life so we need to remember the multiple facets of personal finance, which is why it’s always good to assess if and how lifestyle creep, is creeping up on you.

Why I wear a cheap and clunky $3 watch from China

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Photo by Alvin Mahmudov on Unsplash

On my left arm when I sleep, when I work and even as I’m writing this at the moment, I wear a cheap watch. It boasts a brown fake leather strap with some form of a metal clip.  The face is circled with a gold colored metal with a mechanism on the outward-side to change the time and date. The face itself has the Roman numerals from 9-3 (IX,X,XI,XII,I,II,III) with the other numbers market with a simple strip. Blue hands tick around the face, telling me that it’s getting closer and closer to bedtime. (I still have to make my lunch.)

This is the third watch I’ve been through. One just stopped working and the other one had its strap break at work. So on my left wrist right now I wear my 3rd cheap and clunky $3 watch from China. I have 17 more of them sitting in a tub, in my garage waiting until my current one breaks, and I require their services.

It would have been late 2017 and early 2018. I thought to my self, “People are always buying cheap stuff from China and selling it here. Why can’t I just do that?” So that’s exactly what I did. It took me a few months to set up, I watched multiple videos on Youtube and read countless articles, even attended webinars all based around reselling cheap goods from China. I registered a business with the all of the legal entities required, built up a website sourced the products talking to multiple different suppliers and after a broken leg in November gave me a lot of time to wallow in my crippled sadness and smash through a lot of the admin side of things, early December I was done. The product arrived and I started advertising straight away. All the way up until Christmas. And then I advertised some boxing day sales. Then I advertised some New Years Sales! I cut my price by nearly 50% and by the end of it, I was just trying to make back what I lost. No one bought the watches. (Good thing I only had a small amount of stock.)

By the end of it, I was left with a failed business with no sales and a few hundred dollars down. I think it totaled around $600 by the end of it so all and all, not the biggest loss that could have been made. I moved on to my next thing, which involved taking a course in online business and entrepreneurship but that’s a story for another time. I was left with 20 units of stock. So no I wear them. I don’t wear them to remind me of my failure. I wear them to remind me of the lessons I learned and most importantly, I wear them as a testament to my journey.

When I look down and see my watch, I don’t see some cheap and clunky $3 Watch from China. What I see is a fraction in time where I decided, I was going to do something. I was going to make a business. I liaised with suppliers, I built a website, I invested my money and I ran advertisements. I learned how to write countless spreadsheets and emails. I shipped in some product and set up a business. When I look down at my watch, I see that there was a time in my life when I was completely committed to an idea and followed through with it. Regardless of the outcome, I decided to write my own history and improve my self.

That is why I wear a cheap and clunky $3 watch from China.

I let Bitcoin defeat me and learned a valuable lesson.

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Photo by David Shares on Unsplash

The year would have been 2017 and I was ready to invest. I had hardened my resolve about wanting to live a life of financial freedom and I was ready to work toward that. I started messing around with stocks or to be more specific, leveraged CFD trading. For those of you that don’t know what that is, I’ll make a post about it some time and link it here. I was trading in mainly commodities and cryptocurrency. I had invested maybe $500 and a few good trades with Silver and Oil had my portfolio sitting at $1100 after a few weeks. I had gotten into Bitcoin and decided to ride the wave up. This was when bitcoin was sitting at around $3600. I’d ridden the wave for a small time and my portfolio value was sitting at about $1400.

Then it hit me like a ton of bricks. I had made the biggest rookie mistake you can make in leveraged CFD trading and I went to bed one night with active trades, no stop loss set. I thought I was riding the wave. Then at 5am, I get a message from a friend. “Are you shorting BTC?” In my half a sleep state I reply, “Huh no, long. Why?” I decided to jump onto my platform to have a look at what he was talking about and that’s when I saw it. My portfolio sat at $0.

I had to rub my eyes for a few seconds and then double take, no, triple take to check that what I was seeing was real. It still read $0. My heart sank in an instant. In a matter of a few hours, I had lost $1400. I read in the news later that day that China was cracking down on the use of cryptocurrency so all of the Chinese investors were pulling out quickly and the price dropped overnight from $3600 down to $3000. It even hit $2900 at one point. I didn’t set a stop limiter on my trade and that was it for me, the portfolio I had spent the last month and a half slowly building was all gone in an instant!

I became pretty depressed. My next paycheck rolled around and instead of investing my positive cash flow I just spent it instead. It was probably on alcohol, I had an alcohol addiction at that time which also didn’t help my mental health. I didn’t want to touch stock anymore, I didn’t want to touch CFD trading.  I was in a rut where I lost all motivation. My next paycheck came in and again it was spent on alcohol. A few weeks later, bitcoin had started rising again and was in the news. it hit $4000 but again, I was off it. I didn’t want to touch it. Then it hit $10000. It was on the news, and all of the mother and father breakfast news viewers all for some reason thought it would be smart to invest their entire life savings into it. By the end of the year, bitcoin was sitting at about $24,000 AUD. Obviously, it crashed as anyone should have expected it would. But I had missed my chance. I lost motivation and didn’t want to invest. If only I had invested, I would have made almost a years wages before the crash where clearly it would have been time to sell.

Losing everything, giving up hope and watching helplessly, I had learned a lesson that I can only recently put into words. I was three feet from gold. (Google three feet from gold.) If I had continued investing and not let my defeat dishearten me, then I would have struck digital gold. This lesson taught me that failing isn’t a bad thing. Failure is a lesson. There is a simple reason why I lost my entire portfolio and it wasn’t because investing was bad or because the markets are rigged against me. I didn’t set a stop loss. That’s it. That’s the lesson I needed to learn about CFD trading. Set a limit to your losses so if you aren’t there when something happens, you don’t lose everything. It wasn’t the world against me, it was me against me and if only I had taken that lesson, then I would have a lot more money today. It was a hard lesson to learn, I was three feet from gold, but in the end, I did learn it. I didn’t have a $1400 failure. I had a $1400 lesson and in my honest opinion, I think that lesson is worth every cent.

How I started my journey to Financial Freedom

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Let me just set the scene for you. It was 2pm on a Wednesday afternoon and I had just finished jury duty, something that would have a profound impact on my outlook of life and not for the reasons you would think. I didn’t get selected for any trials and we were all let home early. I went to a pop culture store nearby with the intent to buy a comic book for the train ride home. I ended up stopping in a bar close by with chill music playing and a comfortable chair in the corner where I sipped on some scotch on ice while reading my comic. I read through the entire comic and looked down at my watch. 3PM. I was still getting paid for this. Sitting in a bar, reading a comic and drinking scotch. I had no obligations, no time constraints, nowhere I had to be and no one I had to talk to. I didn’t have to worry about money because I was getting paid. It was that moment in my life when I felt the freest. Nothing can really describe that feeling of true freedom. It was like I was completely in control over my life and I could do whatever I wanted. I went back to the comic store, purchased two more books and went back to the bar. I finished another book and another scotch. I saved the last book for the train though.

But all good things come to pass and the next day I was back at work. Up early in the morning and working the grind. Monotonous work that could barely stimulate my brain let alone keep me asleep and all I could think about for that day, no for the rest of the week, was ‘I wish I was at the bar reading my comics.’ That began to stir something within me that slowly began to surface as one of my life’s greatest desires. I wished to once again feel that level of freedom that I had for that one day. From then to now I started to learn, I started to read, I started to figure out how I could make that a reality, from business ventures to cryptocurrency I started getting my hands into anything to start chasing a dream. That dream, to have the freedom to sit in a bar, reading a comic book sipping on some scotch with absolutely zero obligations, zero time constraints and zero worries about money.

This is the story about my journey towards financial freedom. Am I there? No. Will I get there? Definitely. If you really set your mind to something you can do it. There is an old saying that goes along these lines. “You either work really hard when you are young, or you work really hard when you’re old.” Either way, there is work involved, and I’m prepared to work really hard now so I can have the freedom I desire.