Dear Penny: How do I get my wife to quit the MLM that’s ruining our lives?

Dear Penny,

About seven months ago, my wife’s friend convinced her to join an MLM. She spent thousands of her own savings to buy inventory, attend workshops, etc. She was trying to find something with a flexible schedule so she could work while caring for our two young twins.

Since then, it’s taken over our lives. My wife has charged nearly $4,000 on a credit card replenishing inventory and has yet to earn more than $200 in a month. She probably spends 12 hours most days on Zoom “coaching” calls, trying to promote her products on Facebook and Instagram, etc. Her “business” takes over every conversation she has, whether she’s trying to sell her products or get someone to join her team.

I’ve tried to be supportive because she wanted a career change. In her old job, the cost of day care took up more than half of her salary after taxes. But I’m at my wit’s end. We’re continuing to lose money and go into debt. Her old friends seem to be avoiding her at this point, and everyone she socializes with now is in the MLM. Do you have any advice for us?

— D.

Robin Hartill [ The Penny Hoarder ]

Dear D.,

It may seem obvious to you and me that any “business opportunity” that causes you to lose money month after month is a raw deal. But being part of the MLM has become your wife’s identity. So you’re not just asking her to walk away from a bad job.

For readers who aren’t familiar with MLMs: MLM stands for multilevel marketing. If you have a friend who posts nonstop on social media about how much they’ve made selling candles or shakes or leggings with the promise that you, too, could make unlimited income, assume they’re part of an MLM.

Technically, you can make money by selling products. But the real money is usually in recruiting other distributors and earning commission on their sales, too.

Most people aren’t making money off these opportunities, though. A 2018 AARP Foundation study found that only one-quarter of MLM participants earned a profit, while nearly half lost money. Of the few who did profit, 53% reported earning $5,000 or less.

Obviously, I don’t need to convince you that your wife needs to walk away from this sketchy business. But convincing your wife to give it up will be hard. MLMs are notorious for telling distributors who don’t make money that it’s because of some failing on their own part, when the reality is, it’s a business model in which most people are set up to fail.

I’d suggest trying to keep things as objective as possible and ask your wife to create a budget together. That budget should include paying off the $4,000 credit card balance and not accruing any new debt. If you aren’t spending extravagantly in other areas, maybe your wife will see that it’s the MLM that has to go.

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If she insists on continuing, maybe you can reach a compromise in the interim: She’ll continue only if she’s breaking even. No more taking on credit card debt or digging into savings to buy more inventory.

You say your wife was seeking a new job in part because of child care costs. Make it clear to her that while you want her to leave the MLM, you’re fully supportive of her career goals. The best way you can do that is by making sure that she’s not single-handedly responsible for most child care duties.

Encourage your wife to check out the company’s income disclosure statement, a document that’s supposed to provide sellers with an accurate picture of how much they can expect to earn. MLMs usually post these statements on their websites for legal reasons.

Though the numbers provided are frequently misleading — for example, a few top earners who got into the business early and recruited scores of sellers — they often provide some valuable insight. Your wife should look at the percentage of sellers who reported earning $0 or a very small amount, which is often a sizable majority. Also bear in mind that these statements often don’t account for money sellers spend to buy inventory, which would make the picture even more dismal.

The goal here is for your wife to get an accurate picture of what most people are actually earning. That can be extremely difficult to find in a business where everyone claims to be raking in cash and winning “free” vacations and car leases. Perhaps if your wife can see that few people are actually earning a profit, she won’t see this as a personal failing.

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Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to AskPenny@thepennyhoarder.com.