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I can’t completely fault companies like Amway, Mary Kay, and Lia Sophia. They know that friendship results in two important qualities: trust and guilt. These two qualities are important to companies because they make the process of selling products much easier. I find it relatively easy to politely decline — and hang up on if necessary — a salesperson who calls me uninvited in order to get me to upgrade my phone service or subscribe to a theater. Although I usually don’t have a problem, it can be more difficult to say no to a friend.

In most cases, people join these multi-level marketing (MLM) programs not because they believe in the product but because there is a system designed to allow them to earn significant amounts of money if they play the game right. If you are an influencer in your social circle, you will be able to convince your friends to sell products and host their own parties increasing your income. “Party” is just a code word for “sales pitch.” You can’t achieve success as a multi-level marketer without burning some relationships.

MLM isn’t the only issue. Everyone knows someone who is a social seller. From my observations, the products involved are almost always low quality, too expensive, or both. For example, someone in my office was trying to sell Girl Scout cookies to co-workers the other day for $4 a box. When asked, she had to explain that $4 was the real price and she was not artificially marking the price up. That’s a difficult sell when another co-worker was offering boxes of Girl Scout cookies for $3.50 a piece a few months ago.

I like these cookies, so I usually buy a box each year. Although I’m driven partly by my enjoyment, I’m also driven by guilt. One box of Girl Scout cookies is as far as I’ll go, however.

Dealing with co-workers trying to sell you products you don’t want is easier that dealing with friends who try the same tactics. When a friend is the seller, pressuring you to come to a party (a code word for sales pitch), you have to be strong.

  • First, you can consider going to the party. Don’t bring any money and don’t bring your credit cards. If you see something you truly like and is a good deal, it will be available from your friend later.
  • Politely decline. If you buy from your friend and there is a problem with the product, your friendship could be ruined. If the seller is a co-worker, you could be making your work environment uncomfortable. There are many stories about friends disappearing or not answering calls once they take their money, and the sale could go bad no matter how close you are with your friend.
  • If sales pressure continues, make it clear you are not interested. Sometimes you have to say more than, “No.” Just explain that you’re not interested in the products and you’d prefer to keep the relationship away from business.

Unfortunately, just by denying a friend, you might lose your connection. That may be the fear that prevents people from saying no more often. Saying no is fine, because a good friend won’t use you for their own financial benefit, and a good friend won’t pressure you into something in which you’re not interested.

How do you deal with friends who want to sell you products?

Photo: Pictures from Heather

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This is a guest article by Jennifer Calonia, Junior Editor at GoBankingRates. In the article, the author encourages couples in failing relationships to break-up before holidays and their obligatory expenses are imminent.

While it may sound like the antithesis of romance, calling it quits with your other half before the Valentine’s Day can be advantageous to your heart and your checkbook. Gift-giving and travel (if your significant other is across country) on Valentine’s Day is poised to destroy the savings of those who are too apprehensive to raise the white flag of surrender when it comes to their dead-end relationship.

According to a 2010 report by graphic designers Lee Byron and David McCandless, more couples break up toward the end of the calendar year–peaking two weeks before Christmas and the month after Valentine’s Day.

Valentine's DayThe data were gathered by conducting a year-long search on Facebook statuses which included the words “break up” or “broken up.”

Many argue that data used by Byron and McCandless is drawn from a highly defined sample pool, noting that most Facebook users are younger in their years. Despite that limitation, this study raises significant questions for those in the midst of a turbulent or stagnant relationship.

Break up to save money on gifts and travel

As the saying goes, “breaking up is hard to do,” but it could be a wise financial decision to opt out of your relationship if it’s already hit a brick wall. Instead of waiting for the report’s break-up peak after Valentine’s Day, why not face reality before February lands on your doorstep?

Observances like Valentine’s Day are among the highest-rated gift-giving holidays among couples next to birthdays. According to the National Retail Federation, in 2011, the average expense on Valentine’s Day gifts to a significant other was $68.98 — a figure that is on the rise.

Further, all of the subsequent holidays in the year (i.e. Thanksgiving, Christmas, New Year’s and a sprinkled birthday) present an open door for extra out-of-pocket travel expenses when planning to attend your partner’s family gathering or scheming a romantic getaway.

At the risk of being denounced as cold-hearted or even cheap, severing strained relationships before Valentine’s Day is at minimum, a savvy move for your wallet.

Broken heart: better investment

Seeking out and fostering a relationship with a partner is at its root an effort in finding a spouse. Stringing your significant other along when you don’t see a future ahead is not only by many people’s standards cruel, it’s a fruitless investment. Whether you’re dealing with emotions or finances, keeping long-term goals in sight are an important aspect of achieving success and happiness, overall.

Struggling relationships may not see another opportunity to break up until March, and time is money. There is never a “good time” to break-up, so biding one’s time after the holiday season and into Valentine’s Day is not the most effective approach in the long haul.

Break up with civility before February 14 comes around and open yourself up to a well-rounded year of improvements in 2012.

Editor’s note: I can’t say I’m a fan of making relationship or romantic decisions with finances as a trigger. Personal finance experts tend to see the world in terms of money; if you’re a hammer, everything looks like a nail, or so the saying goes. Obviously finances must be a consideration in major decision-making, and ending a bad relationship earlier rather than later is a better choice than lingering. The worst case scenario is losing a quality relationship over the cost of a bouquet of flowers or a meaningful gift.

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Have you ever had a boyfriend, girlfriend, husband, or wife you want to see again the moment he or she is out of your sight? Has love ever felt like a drug, something you need every minute, and you need more each time? Have you ever failed to understand why you constantly desire a lover who treats you poorly? Perhaps you long for the guy or girl you knew twenty years ago, a fleeting infatuation. Like love, it’s possible for any one person to have a differently relationship with money than the next individual. Love may be a mystery, but money is usually concrete.

What role does money play in your life? I’ve seen everything.

1. Money is the goal itself. Working in the financial industry, this attitude comes as no surprise to me. When the ultimate goal is to accumulate an impressive bank account balance or net worth, the unconditional love of money helps people rationalize their behavior; the end, being wealthy, often justifies the means with this attitude. Never mind the good that can be done with this money; often, those who are obsessed use the wealth they accumulate to buy items that exist primarily to show that wealth off, not items that increase happiness. The philosophy is that displaying wealth to the world increases the chances of attracting more wealth. Even if there is some truth to that, there are other costs, as well.

I may be critical of those who place their faith in money alone, but I’m not anti-wealthy.

2. Money is evil. At the other extreme, you might find people who turn away from wealth at all time. They may have had a bad experience with money in the past. Perhaps they watch the news and take to heart the latest scandals and scams, and assume that money always makes people to awful things to one another. Nations war and people die over money. Bad behavior is often rewarded in the marketplace. How can money be a positive force when it encourages people to make bad decisions? People who think money is evil may not trust the banks to hold onto savings accounts.

This approach is dangerous because it helps those who hold this philosophy to avoid financial freedom, the ability to live mostly on one’s own terms.

3. Money is a tool. This is my camp. Money didn’t exist forever, and happiness itself is a modern concept as well. Money only increases happiness to a point, so why accumulate more money than you need to achieve maximum happiness? There are good reasons. If you set relevant life goals, like helping eliminate hunger in your country, providing all opportunities possible for your children, or encouraging education in the arts, money is one of the strongest tools for reaching your goals. These goals don’t stop at a certain dollar amount. More can always be done.

When I hear someone say their life goal is to have a nest egg of $1 million when they retire, the question I think of is, “Then what?” I understand that decades of hard work can make someone long for retirement and an end to the rate race, but it’s the financial freedom that should be important, not a monetary target. Targets are useful when deciding how to allocate and invest your wealth as it grows, but money is not the purpose intrinsically.

Squirreler shared his thoughts about the role of money in his life, putting money on an equal ground with health and relationships. Health and relationships contribute to happiness. Wealth contributes as well, but only insofar as it fosters health, relationships, and other things like experiences, self-worth, and independence. Therefore, I would not put wealth in a symbiotic equilibrium with anything else. It’s another layer that helps amplify everything else; people who have a positive outlook on life while improve with wealth, while people who take a destructive approach to living will only become more dangerous.

Wealth makes life easier and helps you reach real goals, but money is neither inherently good nor inherently bad.

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Selling newsletters offering stock-picking advice is a big business. This is how sites like The Motley Fool survive, and it’s also a big draw for products carrying Jim Cramer’s name. You may remember Jim Cramer from such CNBC entertainment broadcasts as “Mad Money.” This is a fun show where Jim runs around, punches in sound effects, and yells his buy/sell advice at the camera. Every once in a while, he reminds viewers to consider the long term, but the message contained in the remainder of the broadcast is of more use for people who are looking to trade frequently. His picks haven’t always played out to beat random performance; there have been more than a few websites and videos comparing the stock-picking prowess of Cramer and that of a monkey. The monkey is just as likely to outperform the market.

But monkeys don’t sell stock-picking newsletter, so they can’t get in trouble when they lie. In a recent email newsletter from TheStreet.com, Jim Cramer’s company, there was a chart that showed Cramer’s performance compared to the S&P 500, stating that the portfolio is “crushing” the S&P 500. It was a faulty comparison. The chart didn’t include dividends in the S&P 500 return, while Cramer’s number did include dividends. According to Jason Zweig at the Wall Street Journal, Cramer’s 39.2% did barely beat the accurate benchmark rate of 38.3%. Fees and commissions would eat into that portfolio return, however, if a real investor followed Cramer’s advice. Just squeaking by isn’t as compelling an argument than doubling the S&P 500, Cramer’s marketing team’s original claim.

To approximate Mr. Cramer’s return, you would have had to make an average of 774 trades annually over the past three years, Mr. Barton said. Meanwhile, you could have bought and held an S&P 500 index fund and then done utterly nothing except reinvest your dividends. And you, too, would have more than doubled the market’s return — calculated without dividends.

It’s relatively easy to manipulate numbers to use them to your advantage. People trust numbers, so when a trustworthy source claims a number is true, it’s easy to accept without independent research. I’m not immune to this; I am taking the numbers mentioned in Jason Zweig’s article at face value, much like newsletter readers take Cramer’s numbers without a second thought.

Do you trust what you read? Preconceived notions are sticky. If you read something that agrees with your preconceived notions, you’ll generally accept it as fact, but if something you read goes against what you believe to be true, you’ll assume the writer is wrong or has an agenda to pursue.

Photo: Tulane Public Relations
Wall Street Journal

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Government Shutdowns, Late Paychecks, and Real Motivation

by Luke Landes

People who work for the federal government are concerned today. A shutdown of the federal government due to the lack of functional ability within the Congress might result in delayed paychecks for many government workers. Worse, if the furlough affects workers who handle Social Security payments, people relying on the government for income will not ... Continue reading this article…

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How Much is True Love Worth?

by Luke Landes

Matchmaking is a big business, particularly when the matchmaking services are geared towards the wealthy. With these services, women join for free, and men pay hefty fees to be matched with these women. This is a one-sided arrangement, but it is based on the demographics of the clientele; for the most part, the dynamics follow ... Continue reading this article…

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Getting What You Want: Using Sex as Money

by Luke Landes
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College students, professionals, and married couples are familiar with one of the oldest systems of bartering known to humans: bartering using sex. According to a survey of University of Michigan undergraduate students, 27 percent of unattached men and 14 percent of unattached women offered a service or gift, like laundry or football tickets, in return ... Continue reading this article…

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Are You Better Off Than Your Parents?

by Luke Landes

It’s hard to compare myself with my parents. When they were my age — I’ll be thirty-five years old less than a month from now — they had two children, and the four of us were living in an apartment in upstate New York. I’m not married and I have no children. My father studied ... Continue reading this article…

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Sensuous Value is the Worst Kind

by The Weakonomist

This is an article by The Weakonomist, an anonymous blogger responsible for everything at Weakonomics.com. As a banking insider he’s witnessed the economic implosion from inside the bubble. You can usually find him at the corner of Wall Street and Main Street throwing rocks at traffic. If I presented a monkey with two choices: a ... Continue reading this article…

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3 Aspects of Your Finances You Can Control

by Luke Landes
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Some things are beyond our control, and having a happy and fulfilling life requires accepting those things we cannot change. It’s possible, however, to control more than we believe we can. Right before I first started on my journey of getting my life and finances in shape, I left a low-paying job that depleted my ... Continue reading this article…

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New Trend: Moving In With Your Parents

by Luke Landes

The recession can shape a generation. With many college graduates over the past few years unable to find jobs right away, many opted to move from campus back home with mom and dad. The proliferation of this trend has led to concepts like the Boomerang Generation and Prolonged (or Extended) Adolescence. Both refer to the ... Continue reading this article…

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Extreme Boomerang: Heidi Montag

by Luke Landes

I am completely disconnected from the genre of television shows called “reality.” The fascination with people whose celebrity status stemmed from reality television, or most celebrities in general, seems to be built on a foundation of schadenfreude. People love to hear about the failures of famous people. Heidi Montag and her husband, a couple who ... Continue reading this article…

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All The Ladies Are Interested Now

by Financial Samurai

This is a guest article by Sam, the author of the blog Financial Samurai and the founder of the Yakezie Challenge and Network. He writes a column for Consumerism Commentary every other Tuesday. What a difference a couple weeks makes! Craig has gone from depressed online dater to someone with a ton of self esteem. ... Continue reading this article…

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Income Infatuation and Online Dating

by Financial Samurai

This is a guest article by Sam, the author of the blog Financial Samurai and the founder of the Yakezie Challenge and Network. He writes a column for Consumerism Commentary every other Tuesday. There are 14 income selections one must choose on a particular online dating site my friend Craig recently joined. Take a look ... Continue reading this article…

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Rationalizing an Expense By Changing Your Words

by Luke Landes

As any marketer knows, words have a power beyond their literal meaning. No one knows this more than political marketers, who create campaigns that usurp specific words and ensure their meaning is replaced with some sort of thought the’d like to embed in the public consciousness. This effect isn’t only thrust upon us by marketers; ... Continue reading this article…

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Decision-Making Difficult for Ambivalent People

by Luke Landes

That title sounds a bit obvious. In college, a time that now seems long in my past, friends wanted me to take sides on a variety of issues. I didn’t see the need to feel passionately about issues which clearly had reasonable arguments on either side. I even took pride in my ability to see ... Continue reading this article…

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How to Get Your Spouse On Your Financial Team

by Neal Frankle

This is a guest article by Neal Frankle. Neal is a Certified Financial Planner and blogs at Wealth Pilgrim. Neal writes about taking action steps to improve clients’ financial situations and finding balance at the same time. I’ve often wondered if the posts we write about personal finance are getting into the hands of the ... Continue reading this article…

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What is the Middle Class?

by Luke Landes

“Middle class” is a term that has a hundred different meanings if you ask a hundred people for their definition. Unlike my frustrations with people who call a house a liability, or more accurately, those who claim a house is not an asset, the label of middle class leaves a lot to personal interpretation. While ... Continue reading this article…

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Are You a Maximizer or a Satisficer?

by Aaron Pinkston

This is a guest article by Aaron Pinkston, founder of Clarifinancial. He wasn’t satisfied with the ways people had to get life insurance quotes, so he created something better. Have you ever noticed you can relax about decisions you made while others around you are still running around frantically? On the other hand, you probably ... Continue reading this article…

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You’re Not That Great: 4 Ways to Combat Overconfidence

by Luke Landes

Overconfidence leads investors to believe they can make buying and selling decisions that would result in their performance beating the indexes. Most professional fund managers don’t beat the indexes on a consistent basis, so there is little reason to believe that amateur stock-pickers will be able to succeed where professionals have failed. Are you overconfident? ... Continue reading this article…

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