debt slave

Why MLM is Good for Getting Out of Debt

Why did they join a current MLM?

Many people join an MLM because they want to be debt free. They hear stories of people making large amounts of money and having huge checks and they imagine being able to pay off all their bills at once with a big check like that. Then taking their next  big check to pay cash for their new luxury car. When they are in the business for a good bit and they see how much work is involved to rake in huge checks they quit; thinking to themselves that they will  never make it happen. I have heard people say, ” If I can’t make enough to at least quit my current job it is not worth it.”

Well…. is it? These same people have credit card balances, car loans and a mortgages. So let’s look at just those three and run the numbers for a “not worth it business.”

$100 seems like an insignificant amount. It will not make or break the bank. It’s hard to not blame someone who says if I am only making $100 a month in residual income then it is not worth it, because it is true. $100 does not go very far….. Or does it?

First of all lets look at what it would take in a traditional retirement account to result in a $100 a month residual income.

Residual Income

Based in this chart you would need $24,000! in the bank growing at a minimum of 5% to give you $100 a month residual ongoing income. So before you say my measly $100 a month in residual income from this side business is not worth the few hours I spend a week on it, ask yourself, “Do I have $24,000 somewhere else that I can put into the bank to replace it?”

That reason aside, lets look at the damage an extra $100 a month can make on your debt position.

I am using a Financial Calculator found here

Lets say you financed 13,000 on a car at 7% interest with a term of 60 months. That’s nothing unusual, I would say an about average car payment arrangement.

car loan calculator The 1 signifies your just starting out. You see the $100 in “extra payment” a month.


It appears that by paying an extra $100 per month, you could save $764 in interest ($2,369 vs. $1,605), and own the asset 1.6 years sooner than under your current schedule (4.9 years vs. 3.4 years).

The interest is a not a whole lot because it is only a five year term. However, you own the car a year and a half earlier than you normally would! That is huge. That is basically saying, the last year and a half of your loan you do not need to pay. What would that be worth to you to skip a year and a half of car payments?

Let’s look at a different example, a credit Card.

Let’s say you have a $3,500 balance on a credit card with 16% APR and your paying $60 a month toward it. According to this calculator, if you only are making minimum payments, it will take 62 payments or 5.2 years to pay off the remaining balance. Interest will amount to $1,337.

Now let’s add the additional $100 a month.

credit card payment

By paying an additional $100 per month, it will take 23 payments or 1.9 years to pay off the remaining balance. Interest will amount to $516. This represents a savings of $821 in interest from if you only made the minimum payment amount each month. You will also pay off the credit card 3.2 years sooner.

Three years earlier! What would it be worth to you have three years without a credit card payment?

Now let’s go big time debt and see where the money really hits home; your mortgage.

Let’s look at  a $218,000 loan at 4.5% for a 30 years.  This is pretty standard numbers or at least imaginable for this scenario. A 30 year loan is a 30 year loan so that is how long it will take to pay it back. But let’s throw in an extra $100 a month just to see if it is worth it.

mortgage calculator

Wow. Results.

It appears that by paying an extra $100 per month, you could save $32,083 in interest ($178,829 vs. $146,746), and own the asset 4.7 years sooner than under your current schedule (29.9 years vs. 25.2 years).

Own your house almost 5 years sooner!? That is right. A measly $100 a month not worth my time side business could shave five years off your mortgage.

So…. what will it be? A year an a half off your car loan? Three years off your credit card payments? Or five years off your mortgage? Or do you still want to scrap it all and put the extra $24,000 in the bank now?

People use network marketing to pay off debts because residual income comes month after month after month. It is not a one time job or a bonus here or there. It is an asset that whether it pays you $100 a month or $1,000 it will impact your financial standing. If you don’t see yourself making ten grand a month in MLM that is okay. Or if you can not imagine yourself on stage holding a $50,000 check don’t worry about it. For every one of those, there are a thousand others bringing in a couple hundred a month (because that is all the effort they want to put into it) and it is making a huge impact on their finances.

Credit card, car or home….where will you put your extra $100 a month?

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