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The Case of Fay Naivete

By Thomas J. Stanley on Sep 23rd, 2010 in Mentor's Corner

People are often vulnerable to “get rich quick” solicitations when they see their economic future dimming or when they have had a financial reversal.  In this context consider a letter I received from a woman I refer to as “Fay Naivete.”

My husband and I were extreme income statement affluent types.  He came from money; I came from a middle income family that had no frugality at all.  . . .married. . . moved into one of the homes that my husband’s family owned . . . husband then began working for the family business.

We were constantly injected, unpredictably, with ‘gifts’ (economic outpatient care) . . . .  We spend well beyond our earnings. . . to sustain a lifestyle of our upscale neighborhood.

My husband, his sister and brother, all virtually supported by their parents.  In my naivete I didn’t see anything unusual with this – I thought this was how all families with money did things, and your book points out that some do!

. . . (husbands’s) grandmother . . . always told my husband and his siblings that she would sell the family business and leave . . . her $20 million to them . . . but then dies and left most of the money to charitable organizations.  Before this . . . all was peaceful . . .

. . . You can imagine. . .turmoil ensued. . . my husband was promptly removed from (managing the family business that no longer existed0. . . and so it began. . . at first, we were angry and decided to fight (contest the will). . . but with no income plus $50,000 in credit card debt and no assets of any kind we had little leverage. . . .

Fay has advised me that she and her husband have a solution to their predicament: gotten involved with a multi level marketing company [of the pyramid variety].  Now as a distributor they can sell distributorships to others.  But before they get too far into this relationship they may wish to look in the appendices of The Millionaire Next Door and The Millionaire Mind.  In there they will find lists of businesses owned by millionaires.  As one recent reader of this material said, “I saw few if any multi level marketing businesses listed.”

What do I do when people approach me with a wonderful economic opportunity as detailed above?  I use the argument of six selling six to counter it.  And here is the progression: 6 distributors each sell 6 distributorships; then each of these sells 6.  After the 10th progression, there will be over 72 million total; after the 13th progression, there will be almost 16 billion distributorship, greatly exceeding the world population!  Is this why we may need to colonize Mars?

5 responses to “The Case of Fay Naivete”

  1. Fred says:

    Thomas,

    It pains me every time I here about someone joining one of these MLM schemes. I attend a Meetup group every month and there is always someone new who is all jazzed up about their new MLM. It makes me feel so sorry for them.

    Fred,
    http://www.solobizcoach.com

  2. Derek Lee says:

    While pyramids are certainly illegal and never a source of wealth (see Madoff), legitimate multilevel marketing (MLM) or newer network marketing models are certainly a source of wealth for those that are willing to work hard, just like a traditional small business.

    There may not be many people listed in your books, but I know more than 10 millionaires personally who achieved their wealth through MLM and conservative living, across several different companies to boot. The key of this article should be: don’t be desperate when times are down. Don’t go joining any get rich quick scheme that you can in total desperation.

    In whatever you do, do your due diligence and take the time to research your options before starting any kind of business, MLM or not.

  3. Blake says:

    The truth of my experience is I give & they recieve, they get awards & I give, I sell more they get watches, I get to go to a group meeting to give more. out of fifty people who spent a lot of time selling to friends & family the great new deal. one guy took everyones money & ran before the business fell apart. three weeks later he was starting up another. I agree with Derek & Fred stay true to yourself, study the gameplan before you get played. MLM beware, they pray upon greed and desperation.
    ~ Blake ~

  4. Mike @ MikeVeny.com says:

    I find that multilevel marketing exploits relationships.

    Also, as a business owner myself, I regularly attend networking events and Meetup groups.

    Recently, I have had to prepare myself to politely say “No” to the network marketers I meet.

    As an aspiring millionaire, I appreciate your article.

  5. Hari says:

    Personally I found MLM to be good only for the personal development and Goal setting that they encourage. Some of the larger ones have half decent education programs which may be partly useful in general life.
    But as a business their rates of success and return are far lower than even traditional business. Needless to say about all the lost friends and broken relationships.

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