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In the final TGTBT episode of season 1, Julia and Ryan dive into the various predatory financial scams that seem like they're here to help, from debt consolidation to whole life insurance to everything in-between.

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To learn about refinancing and for a chance to have your student loans paid off, visit That' [MUSIC PLAYING] Welcome to Too Good To Be True, an investigative podcast about exposing the scams schemes and financial cults trying to separate you from your money.

Welcome back to The Financial Diet's Too Good To Be True. I'm editor and journalist Ryan Houlihan. And I am Julia Lorenz-Olson, the co-host of Two Cents from PBS and an accredited financial counselor.

So what topic are you bringing to our horror show of nasties and baddies today? Well, this is kind of my play zone, if you will. Welcome into my world.

So I have been in the financial industry in one form or another for-- I was just thinking about this today. I was like, how long have I been doing this? Between 12 and 13 years.

And there are so many products and services out there that sound really legit, one, and have an army of people and PR around them to make them seem very attractive. But really, it only takes a little bit of digging to see how hollow the offer really is. And some of this is just-- I mean, there is that sort of scam spectrum.

And these do run somewhere within that spectrum, but some of them are just really, really bad. See, that's so interesting I think what's really tough is that for someone like me, who I've done a lot of writing about money and about specific issues of scams, for example, or concepts about money. But in my actual personal life, my finances aren't terribly complicated and I haven't been, I'm going to be completely honest, the most proactive person until recently about taking charge of them and really being an active part of my own financial life as opposed to passively thinking, well, I'm doing the right stuff.

I won't worry about it. And I have, in fact, fallen for a couple of scammy fake financial services that I didn't really need, but I thought, I don't know what I'm doing. Let me turn to someone who does.

So I've purchased a lot of tax preparation software that, beyond just even the normal $20, this is going to be a program that will have lots of explanations. Maybe you find value in that. I have spent a few hundred dollars on tax preparation software because I thought I needed the complete package.

I feel like tax preparation, it definitely deserves its own topic at some point, but that's so interesting. I think this is a symptom of a really deep underlying problem, and that is the huge lack of financial education. I know we're just going to come back and harp on this over and over again, but a lot of these products are able to be pushed so easily onto people because they have no concept as to what to compare it to, right?

They don't know what the alternatives are. And even if they do know there might be an alternative to this, they don't know what they're really getting into or what they should expect from the product itself. You know, I have some experience myself of not having the most thorough understanding of things like how insurance works, and I have signed up for packages I did not need in a panic because I was like, I'm an adult.

I'll just do a choice and then fix it after the fact. Which ended up working out because I could fix certain things after the fact, but I lost money in the meantime, which, if I had had some basic understanding or even understanding of how to get a basic understanding, I might have-- it might have been a different story. I think that understanding how to get the basic understanding is a big problem.

Where are you going to get information? Maybe hopefully The Financial Diet, but there's no one place that you can go to. And within personal finance, there are different philosophies.

I get a lot of people who come to me and they're saying, I'm hearing this over here. I'm hearing this over here. I'm hearing this over here.

Is this a scam? This person says it's amazing. So it's very understandable that even if you d do your research, it can still be overwhelming and confusing.

I mean, everyone is so incentivized to trick you or to sound like they are something that they're not. Daniella Flores is a perfect example that truly anyone can find themselves victim to a predatory financial company, even a highly educated software engineer working at a new startup. Today, Flores is the founder of, a free money, career, and finance resource platform focused on queer and neurodivergent people which they founded five years ago as a side job while they worked in tech.

Daniella is a perfect example of a student who, despite all the odds, did everything asked of them only to find themselves, in the end, targeted, scammed, and exploited. Here's how they got there. So back then, when I was getting ready to go to school-- so I come from a family where my dad is an immigrant from Venezuela and my mom grew up in America.

My dad believed in the American dream because he followed it when he came over to this country. He went to school, got a job, and yada, yada, yada. He thought that was the only way to make it through.

And when I was going to school, at the time I went to a private all girls high school, which is a very privileged place to be. And from there there's a lot of people at my school that are a lot, let's say, wealthier than me and my family, and it was just very-- it was a culture of going to college and who was going to what college and that kind of was a status symbol, weird classism kind of thing going on. And I just knew I just had to go to college, and so paying for it, I wanted to go to school for fine arts.

I come from a family that did not see that as a quote, unquote, "real job." And they said if I wanted to do that I would have to pay my way through school by myself. At the time I had a job in high school and I was prepared to get more jobs because I knew I had to pay a good chunk. I had to pay for all of my books and basically everything, including part of my tuition.

We got loans out for half of my tuition and my parents helped me pay the other half. I paid for the books and for room and board. Money was like the last thing I wanted to understand.

I was just trying to figure out how to survive in that kind of academic culture, and I remember thinking of the options of how we would pay for it. My parents said, you know, obviously you wouldn't be able to pay for it on your own because you can't just work the entire time, more than three jobs, because how are you going to study and do well in school? And they were prepared to pay part of it but they couldn't pay all of it, so we looked at loan options.

And before that we talked to the school about work study options, but it was never a lot. I did some work study in the library, but it was maybe $500 total. That was all.

It was not a lot. And then also the loans and working and with my parents, but it was like the options weren't really there. It was like you either take loans out, you pay for it yourself, you do work study, or you could do scholarships.

I wasn't the person with a 3.5 GPA or more. I think I had a 3.25 GPA. I was very much like a B, C student.

I really struggled in school. But that was basically all of the options that were given. You have scholarships, loans, work study, do it yourself, and that's about it.

And they make a lot of money off of us, not just at the school but everything outside of it. It felt like this joint thing from, well, the credit unions and the schools were basically where we got our loan through. The credit unions, they were advertising a lot then for student loan product offerings.

I remember going into the credit union and seeing the giant banners that were set up with the pictures of students and their families signing out loans. It was a big thing back then, and this back then was 2007. You know?

When I went to go take out loans I didn't understand any of that process. My parents did try to explain it to me, but I saw it as, all right, I'm taking these loans out to go to school. I don't have to pay them until six months after I get out.

I don't have to worry about these right now. I don't care about them. And my view of money back then was pretty-- I was really avoidant with money, and that still comes up today.

People want help with money, right? Yeah. We're here because that is true, right?

Yeah. So when you hear from your uncle or your friend that you went to college with, hey, I have this really awesome financial advisor. Why don't you talk to them?

You think they're going to be looking at you as a holistic human being and giving you some sort of plan, but for the most part that's not true. The term financial advisor should actually always put up a red flag because that's not a regulated term. That doesn't mean anything.

And being sold something is a wonderful experience. It's so nice when someone's telling you that the solution is easy and that they can treat all of your problems with a one easy tool. That is so true.

And so you might walk away, have a sparkling opinion of this person who took advantage of you, and start posting reviews online or telling friends. And the insidiousness of it is it's so much harder to deal with a financial planner who might be telling you things are not such a rosy picture or things that are not possible that will be simple solutions. But you want that honest, authentic reality reflected back on you, not just someone's sales pitch.

Yeah. I mean, it can be a hard pill to swallow, but for the most part just always be on your guard when-- I don't want to paint them as evil individuals. A lot of them are very knowledgeable.

But you should always ask, are you a fiduciary? Which tells you that that person can be legally held liable to put your benefit, your financial benefit, above their own. That's really important to ask-- That's crucial. --whenever you're talking to somebody who might want to help you with this stuff.

So let's start with credit card insurance. What sort of familiarity do you have with this? Little to none.

I don't know a ton about it because I've only recently gotten a credit card to begin with. That's right. You've been credit card free for quite a while.

How long have you had this now? For three years I have. Oh, OK.

Yeah. So I've been-- That's pretty good. --able to expand into other less-- other more useful cards to me financially than a secured credit card. That's right.

So credit card insurance is a type of insurance that will kick in to pay your credit card in the event that you can't, and there are different types that provide coverage in different cases. So death or disability or unemployment, which, by the way, those three things have insurance policies that you can buy for those specific purposes. You can buy life insurance for a death.

You can buy specifically disability insurance, and there are unemployment benefits that are supposed to kick in should you lose your job for a certain period of time under a certain circumstance. So already you're kind of like, well, this might be a little overkill. Why do I need extra credit card insurance?

So usually companies will ask you to purchase this when you initially sign up for the credit card, or later in some sort of telemarketing outreach that they do. And I have to say, I mean, this is an interesting offer because I think a lot of people are aware of the risks that come with owning a credit card. They know if you can't pay your credit card bill bad things happen.

So I think that's a really easy place to come in and be like, hey, you can buy an insurance policy and you don't have to worry. Somebody else will pay your credit card bill for you. How amazing.

So what they typically do-- and this is pretty shady, in my opinion. So when credit insurance is purchased up at the beginning, it's typically offered for free for a specific time period. And then after that trial is over you start being billed for it because accepting the trial means automatic enrollment in the program.

Boo, right? Oh my God. I think a big red flag is anytime somebody offering you something for free for a limited time, right?

I mean, any free offer, I would say in general, if you're not paying for the product you are the product. Exactly right. So this is almost never really worth the money to purchase because for one thing, you are much better off just putting that money you would have spent on this policy into an emergency fund so you can cover your expenses yourself in the event of an emergency.

So I will probably come back to this a lot, talking about how important an emergency fund really is because this is essentially you insuring yourself, and it's not use it or lose it. If you never ended up needing this policy to show up for you or need to be used at all, the money is gone. Yeah.

If you were just putting this money away piece by piece for yourself it would be in the first year you're unlikely, especially if you've only just opened a credit card and you're only starting to put things on it, that first year of building up an emergency fund maybe you would have a smaller access because it's not as large. But in the second year and anything else going forward, you've probably put together enough money that you would be able to cushion that blow for yourself. And if you never needed it-- Amazing.

Yeah. You have money. That's such a trick.

Yeah, you have built your net worth in the meantime. That's the worst case scenario here is you've built your net worth. Yeah.

An emergency fund is kind of like a life jacket of sorts because coming out into the world, you never know what storms are going to come your way. You don't have control over what happens in your life. Surprise.

Surprise. And it's really important that, as much as you can, you shore up yourself. You use the tools that are available to you to help cushion the blow of inevitable storms that are going to come your way.

So what does this look like when people get involved in it? How are people hearing about this and what is-- who's pushing it? So it's the credit card companies themselves.

And they are typically pitching this at the very beginning when you sign up for the policy, or they call you later. And in the event that something that they're insuring against does happen, like passing away or something like that, I mean, a term life insurance policy would pay out to the beneficiary and could be used for something other than paying off debt. But this would just go specifically back to the credit card.

So I would advocate if you have the cash flow to be able to manage payments for actual insurances, you're far better off just getting a term life insurance policy to deal with financial issues that may crop up if you untimely pass away. Same thing for disability. Disability insurance kicks in if you are deemed disabled and unable to work for a certain period of time, and then it will pay you, in cash, something you could use for lots of different things.

You can be flexible with it in the event that you are disabled for a certain amount of time. It will pay you a certain portion of your normal income. So I think these are two much better ways to deal with the issues that they're trying to scare you about.

And I do want to point out that if you are wanting to start this journey of getting a credit card yourself and you are afraid that you're going to get in a situation where you are spending beyond your means, this is not going to help you. I mean, you have to pay for this service too so this is only going to add to your cash flow burden. And if your fear is that you're going to put yourself in debt up to your eyeballs, maybe don't use it.

Or there are other products out there, like for example, a secured credit card, which I know is something that you have had an experience with. Yeah. And it was incredibly useful when I needed to begin my credit history and start establishing some sort of payments that I had made.

And it is a way for you to pay a set amount of money that is the amount that you're being lended as a credit line. It's like a prepaid credit card. 100% It's like you give your money to this credit card company, let's say it's $500, and then they give you a credit card. And then when you use that credit card that information is reported to the credit bureaus, and you're not allowed to go over what you have already given them upfront.

And of course, that's not an excellent solution for every single person in every circumstance-- No, not at all. --but at the beginning of a credit journey it can be an incredibly useful tool and it is way better to go with that option than it is to get a credit card that you are scared you won't even have control over the situation and sign up for an insurance that is being predatory to begin with to solve the problem should it come up. If you follow the good credit card advice and-- Which is essentially treat it like a debit card, right? Yeah.

Pay it at the end of the month. That's what it boils down to. Don't charge an amount you're not going to be able to cover, then this isn't going to come up for you anyway.

So not to pivot, but I think we need to pivot into something new. Have you ever been in a situation where you had a lot of different debt payments to a lot of different debtors and its felt overwhelming? Yes.

It has happened to me multiple times in an acute instance where it happened really quickly that I was in a debt that I couldn't manage, and then also slowly over time my lack of focus on my own finances led me down a road where I felt that things had grown unimaginably difficult over a course of a year and a half, I think. Oh, wow. And I didn't realize quite the struggle that I had laid out for myself and it took a while to dig us back out of it.

Yeah. So typically I would say that the people who come to me and they have just one debt on the books and have a very simple situation is not the norm. Typically people who have really any sort of debt have multiple kinds.

That was the worst kind for me. Yeah. And it can feel-- Every time I pay a bill someone else wants more money from me, and I never am able to manage who wants what when because it's constantly full of surprises and fees and things I haven't heard of, and everybody has different policies.

You know like the whac-a-mole game that you used to play when you wanted to go to the-- not the casino. What is it? An arcade.

Arcade or a carnival. Arcade. Oh my gosh.

Maybe the casino is just a grown up arcade. Did we ever think of that? Topic for another day.

Another day. But yeah, it feels like whac-a-mole, like you pay over here and then you pay over here, and then maybe you forget something over here and oh my gosh. It can create a sense of complication that can make things harder to manage.

So what if somebody comes to and they say, hey, this is what I can do for you. I'm just going to pool all your debts in one thing and you just pay one payment. I mean, that sounds pretty sweet, right?

Yeah. Yeah. So to be clear, debt consolidation is actually a legitimate financial offering in many places.

I know most people who are looking for this tend to go to a bank that they're already at, a local credit union. There are also different financial products you can get like a key lock, which is a home equity line of credit. So for example, if you owned a home and you got yourself into a bunch of other non-mortgage debt, you could take out a singular loan from the home and pay off all of these things.

So that is a legitimate thing to do. It is a good choice for some people. Actually, on that note, thanks to our friends at SoFi for supporting this episode of Too Good To Be True.

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I know that for me I have just a handful of federal student loans left that I need to knock out. I threw a little party when I paid off my private loans, and I'm going to throw an even bigger party when I get those federal loans off my back. And a chance like this to finally knock out that horrible demon that has faced me down every day since I was 17, it would change my life.

To learn more about refinancing and for a chance to have your student loans paid off, visit That's Now, where you have to be suspicious is when there are businesses that say they're a debt consolidation company, but in fact they're selling debt settlement programs.

So there are two big companies in this space. There's Freedom Debt Relief and National Debt Relief. I mean, to sell relief-- how appealing, right?

Yeah. You can buy relief. They sound even like government programs or some very official sounding authorities.

National Debt Relief. I mean, that does sound quite legit. But this is a very different situation.

So once you enroll in the process they tell you to stop making direct payments to your creditors, and instead, you pay them and they shuffle this money into a separate savings account. And after the account accumulates enough money, the company starts to begin negotiating with the individual creditors on your behalf to get them to basically accept less than the amount you owe. And the idea is that once you stop paying somebody they're going to want you to pay them, so the fire is under them to get as much money out of you as possible.

So they're hoping that they're going to be motivated to take the lower sum rather than risk getting nothing at all. But if you stop making payments to your creditors, what do you think happens? They're coming after you.

Oh, your credit score is going to basically pass out. I mean, it is going to be shot to hell because one of the main things, really the biggest portion of what goes into calculating your credit score is actually on time payments. And so if you are not going to pay on time it is going to trash your score.

That is a guaranteed. And now credit scores do kind of function a bit like broken bones. It hurts the most when it first happens and then it can heal over time.

But if you are continually not making payments on time it is going to get worse, and it is going to be harder and harder to make better the longer you wait. And sometimes these companies can make you wait for six months, and sometimes it doesn't even work. Sometimes the company that you are trying to negotiate with is not going to accept your settlement.

It sounds like something that sounds like a quick or easy fix, like a solution that will be a blanket solution, but as time goes on the cracks are going to start to show. Yeah. And there's also a pretty big crack that shows up when they even are successful.

So let's say they actually happen to negotiate something properly for you. That's when the debt relief company actually gets paid. So their service fees pop up then and they can be as high as 18% to 25% of your total debt.

So here's just a quick number scenario. A customer who settles a $5,000 credit card balance for $3,000, for example. They would pay the debt relief company between $900 to $1,250 for that service.

So you're only getting like a tiny sliver-- Yeah. That's not even $1,000. And in order to save $1,000 you've trashed your credit for probably years.

That is just not worth it in the vast majority of scenarios. And people coming in for this help are the exact sort of people who've self identified and curated as a group to not being super versed in how credit works or their credit score. So they're taking advantage of people whose education on the topic is, of course, by necessity of who they are, super low.

Yeah. And legally, these types of services are not allowed to charge you upfront fees. They're only supposed to charge you when they are quote, unquote, "successful" in negotiating something on your behalf.

And to be clear, some of these companies are offering this service. I obviously don't think that this service is worth what they're charging, but they are actually doing the work. And then there are lots of these companies that are just outright scams.

They're just lying. Exactly. I mean, you'll get a call from them, usually telemarketing.

And whenever something says that they're a special government program that's usually a huge red flag. Yeah. Like, well, probably not.

Daniella Flores personally experienced just how seductive a lot of these fake financial services can be, specifically for the people who need them the most. And just how long it can take for you to realize the extent to which you've been had. So the first job I got out of college was an unpaid internship, which should be absolutely illegal.

Unpaid internships shouldn't exist. But it was an unpaid internship for a web startup in Saint Louis, Missouri, and I was hired on full time there probably two weeks to a month after. And I was working as a web engineer barely making $30,000 a year.

My paychecks weren't even $1,000 each after health insurance and stuff was taken out. So I remember getting my paychecks and seeing my student loan payment like, well, great. How do I do this with paying for other things like my car and my cell phone?

I remember I was living back with my parents and I was trying to get an apartment, and it just seemed really impossible. So ever since the moment I just start getting the payment notifications in the mail that, OK, your loans, you have to start paying them back now. It's been after six months.

I was like, OK, my mom and dad were trying to be like, don't pay the absolute minimum. Try to pay as much as you can to get them paid off. And it's like, well, how do you expect me to do that if at the same time I'm not qualified to have a high enough paying job to do that?

So I try to do the income-- there was like an income plan. And then at the time, I was also-- I guess, mentally, my mindset was not in the place where I even cared about those loans. I also had a drinking problem.

I had kind of a prescription drug problem at the time with my ADHD, which I soon got off that medication. And at the time money was not a priority for me, at least paying off that loan. I thought, hey, this debt here, maybe it'll go away if I ignore it.

I remember this was a couple-- this was maybe a year after I started paying it and I just couldn't keep up with the payments and the phone calls from the student loan collection. Back then I would overdraft my account so much, by hundreds of dollars that I never set it up on autopay. So they would call me and harass me as soon as it was a day after my payment wasn't there.

From that job, my first job out of college, I got extremely burnt out because it was a startup that really took advantage of younger people that worked for them where they would have-- they wanted you to stay there as much as possible and work. Even though it was also a hybrid remote job and they said that you can work remotely, if you want, but only when it makes the most sense. But they really wanted to be in the office.

They would provide food, snacks, alcohol. They'd give you free concert passes and restaurant outings after work so you can go back to the office afterwards and do more work, and I was just constantly coding and working 80 hour weeks. And I got so burned out that I stopped coming to work because I was like, I couldn't do it.

I don't know why I'm getting emotional. So I remember after losing that first job, which was something-- it's like they didn't-- they basically let me go after I wouldn't come back. So I remember after leaving my job I didn't have a job at the time and I took on-- I went back to serving and waitressing and doing jobs on the side and side hustles that I paused my payment and I did the one where your interest keeps accruing, you know?

So I didn't realize that during that time, my balance is going to grow. I thought it would stay the same. And they also encouraged it for me because they said, oh, since you're unemployed now, you're in-- because it was right at the time I was starting my serving job and I was basically unemployed because I wasn't going to make enough to pay that off.

And they're like, we recommend that you defer this because this is the best for your situation right now, but they weren't fully clear. I also did not read anything. My solution was to just keep chipping away at it.

I thought I would never pay it off because every time I was paying it, it just stayed at the same amount. It didn't seem like it was moving ever. Because originally all we took out for loans was $15,000 for my four years-- yeah, four years of college is $15,000 because it wasn't the full amount of the tuition.

I really tried to pay as much as I could. And just those couple of years from that time to the time that I got-- consolidated them, I didn't even pay off-- the balance didn't even go down $2,000. It had hardly budged in several years of me just paying the lowest amount I could.

I heard of the word consolidation. This was back in-- so I went through some old emails and I found when I started the consolidation. That was in 2017 when I consolidated it because I kept hearing-- I'm reading online financial blogs, and hearing that consolidation is a way to help you pay off your loans while saving money paying them off because I was like, I can't keep having this balance stay the same where I'm paying off more than I originally took out.

I didn't want that to keep happening. So I was like, OK, consolidation sounds like it might help. Then I had gotten an email from a company.

They're called is the company and they said that it was a Department of Education initiative to help people consolidate their loans. So I thought they were with the Department of Education. So I was like, oh, cool.

All right. I would like to do that. Yes.

And I didn't think it would cost extra money, but it did cost extra money to do that. They called me. They talked to me about my two loans that I had and consolidating them, and then they sent me an email with basically the processing fees and they said, these are the fees that we require to process each loan.

And then we have fees to maintain them, which that part didn't come till later. And then they also had these random processing fees they throw in every couple months. And I would ask them, hey, what's this random charge?

And they'd be like, this is an additional processing fee. I was like, OK. They forwarded me to another phone number and then they basically just told me the same thing.

It was very strange, and at the time I really wish I wasn't-- also at the time I was working a lot. I was going through back to back layoffs. I was at my new company-- 2017 I was at the new company right before that second layoff.

I was having to deal with a lot of stress in my life and I was like, I just want this to be handled and to go away, so whatever. I'll just do whatever they need to do. And then I remember there was the one day I got this random $500 charge when all the stuff had already been processed.

I paid the processing fees. And I asked them, what is this random $500 charge? And I was like, I'm really starting to think that this is a scam.

And they're like, oh, no, no, no, no. No, no, no. This is for this.

Please call this person. And I was like, what? It was very weird.

And that happened two times, that weird $500 charge. And that was on top of the processing fees, which total were almost $2,000 just to process the consolidation. Which later on, towards the end when I finally had enough money to pay them off-- which I used my emergency fund to do that, which now I would not recommend anyone to do, but I had to do it because I was just in this weird fight and flight kind of thing it was like, I just want this to go away.

And I did that not even through them. I went through the FedLoan website, I think, and I did the payment there. But that was after two and a half years of these people after they consolidated my loan, and then charging me also $39 a month to quote, unquote, "maintain the loan," even though it's already maintained with the loan provider.

Yeah. I remember after that finding an article on-- they have a forum there where other people would talk. All these other people are chiming in about their similar experiences with that same company,, and about how loan consolidation companies will never charge you these processing fees.

I would never get it back. Now it's like, oh, I don't even want to-- I don't even want to think about trying to get it back. I just never want to deal with them again.

So when I was looking for the old emails for this conversation I was like, oh wow, this brought back a flood of memories that I basically blocked from my brain too. And then I was like, oh, finally, I'm done with that so I can finally focus on building wealth. What does that look like?

I need to figure out my financial situation because now I'm finally done with this debt that feels like such a weight on your shoulders and you feel like you can't focus on other things financially or how to build your life. You feel like you have to first get all these people off your back. And without that, I probably-- who knows where I would be now?

Who knows where I would be now if I didn't have all that time from those schools? Also the high school and that culture, and the culture around loans and banks and credit unions. All that pressure of, here's what you've got to do to go to school, pay for school, and so you can do stuff after school.

Because if you don't, you won't be able to do anything. You won't be able to be anybody. My parents even said, if you're not going to go to college, what are you going to do?

Are you going to go work in fast food? And it's like, that's such a cop-- why do we say that? Why do we say that?

It's really weird to think about all that back then versus now and kind of like-- I guess kind of in a financial literacy movement that's happened with online media and younger people, especially taking their power back and saying, we don't need this bullshit. We can make a different way. So let's backtrack.

So my husband, about 13 years ago now, was trying to get out of the industry that he was in. He was a private school theater teacher, and he had a love of finance. We were both getting into the personal finance space just as a hobby between the two of us.

And so he goes to a job fair and he gets recruited by, at the time, a subsidiary of MetLife to become a financial advisor. Now, we are thrilled. We're like, oh my gosh, what an amazing opportunity.

You were going to get to help people get out of debt, help teach people how to budget. It's a calling. It's a calling.

It is a passion, I guess you could say, for us at the time. How wonderful. What they're not really telling him at the time was, you're not really being recruited to advise people on their finances as a holistic thing.

You are being taught how to primarily sell life insurance. OK. Yes.

So life insurance is a whole big thing. What do you know about life insurance? I know that because I'm younger and, in what data they can collect, relatively good demographic health, I have very low-- in the past had very low cost options through my employer.

And that's all I know is that my dad said, check that box that you want it taken out of your paycheck and that was it. I don't know. And I know that life insurance is if we were to pass away, that there are beneficiaries to help resolve any financial issues you might have had and take care of your family going forward.

That's all I know. Yeah. So ultimately really any insurance, but specifically life insurance, acts as a risk mitigator.

So what it's really designed to do is ensure that income can continue for the beneficiaries, or rather, the dependents of the person who you are insuring. That's really, in my opinion and in the opinion of lots of professionals, the best use of that product. And life insurance comes in two main forms, term and whole life insurance.

I do not know the difference between those two. Perfect. So let's start with term.

OK. Term, like it says in the name, only lasts for a specified term of time. So as long as you pay a premium to the life insurance company, the benefit stays in place.

And if you were to die during that term your beneficiaries would get what's called a death benefit, which is a terrible term. Yeah. So if you were to die during that time that the life insurance is in place during that term-- usually they come in 10, 20, and 30 year terms-- then your beneficiaries will get a death benefit, a payout of sorts that goes straight to them.

It is non-taxable for the most part, so that makes it very appealing. And the point is to basically cushion the financial blow of losing someone in your life that you depend on. I mean, and that is probably what makes it such a large area for people to be taken advantage of because that fear and the discomfort with that topic while making these plans can lead you to make some shorter decision making-- have a shorter decision making process because you just want to be away from a very uncomfortable topic.

That's very true. So over here we have term, which we just described. On the other side we have what we will be delving into today, which is whole life insurance.

So just based on that, what do you think it is just based on that? Are you signing up for basically an insurance plan indefinitely that you have to pay and then it's whenever anything happens? Kind of.

So a whole life insurance policy has no term. It will, in theory, be in place forever as long as you pay the premium. So as long as you pay you get basically locked into a rate and a payment, and that amount stays flat.

So I'm assuming that amount is going to be much more than it would have been if it was just for a term that they could make a better estimate about. Bingo. Oh.

So that is how they are able to do this in a financially profitable way because these companies aren't here just to help people. No. If they were here to just help people they wouldn't be private companies.

Exactly. I mean, these are massively profitable companies. But the way they can make up for that issue is that the premiums are much, much higher over on a whole life insurance policy.

But what has happened is they are trying to create a very special kind of financial product by blending an insurance and an investment portion. So yes, I know. Oh, wow.

Just wait. And man, I just have to say, the PR on this, the Kool-Aid that you have to drink to make this work is really intense. So here's the pitch.

Let me give it to you like this. This is what they are saying. One, don't you want to take care of your kids and/or your spouse and/or your family, even if you don't have anybody depending on you?

Don't you want your family to have some sort of benefit when you die? That's one. Secondly, but what if you don't die for a long time and you're paying all this money?

Wouldn't you also like to have some money waiting for you to tap into if you don't die? So what they do is they say, you pay us this high premium and we're going to split this money basically into two portions. One portion will go to pay for the actual insurance part of it.

And that's actually a much smaller portion than the other piece, which goes into a quote, unquote, "account" that's called the cash value of the policy, and that cash value is invested and theoretically grows over time. And then at some point, if you decide that you don't either want the policy anymore or you want access to that cash you can take it out to live on or buy a boat or whatever your fancy. So that sounds amazing in theory.

Oh, why not get a two for one? But think about those bottles that say, two in one shampoo and conditioner. It's like, eh, I kind of feel like I'm getting the worst of both worlds here.

Yeah. And it incentivizes each of those separate goals to be slightly more skewed than they would have been because they're trying to serve as two problems rather than just one problem. Exactly right.

So here's the thing is that the investment piece that people are really excited about is not that good at all. It's actually pretty dismal when you start digging into the numbers. Even just you go an inch below the surface here and you're like, oh no.

So typically they will offer, like, a 5% to 6% return on that investment. But one, you don't get to pick what this is invested in. Oh.

And there are fees attached to this. Of course there are. Of course.

I mean, there's always going to be fees. So typically at the end of the day, you're really only going to be netting somewhere around a 2% return on this. That's all?

Yes. That is it. So the thing is that when you tell somebody, hey, you're only getting 2% return and they don't have any sort of decent financial education, how do they know what to compare it to?

How do they know that, well, inflation typically hovers around 2%. Now we happen to be in a particularly high inflationary period right now. But if you don't have that to compare it to you can say, well, wait.

If inflation is 2% and this is getting me 2%, I'm at a net zero. It's very similar to-- I used to be at a job that would give a mandatory cost of living raise which was actually less than inflation, and it was supposed to be-- it was sold to you as a you'll definitely be getting a raise one way or the other, but it was less than the actual inflation for the year so you were getting a pay cut every single year. And it was not even up for discussion whether or not that was negotiable because you'd already signed up.

And it's a similar sort of scam where if people are only financially versed in the broad strokes they might not be able to put different pieces together and take into account different factors, which make the numbers they're being presented look very different. Exactly. If you don't to take inflation into account you wouldn't have-- you would never pick that up.

Exactly right. And you have to think that a lot of these people are holding on to these terms for a long time. That's kind of the point.

Instead of going the term route you want something long term that you-- let's say you get diagnosed with cancer. It's still going to remain in place. You don't have to worry about the day that it expires.

So I get it. However, when you look at the investment piece, which is the thing that is the reason why people are buying this. If you were to compare paying that amount every month-- so for example, I think back when I was being rated for life insurance back in the day, when I got a quote for my term insurance it was, like, $50 a month.

The exact same death benefit in a whole life insurance policy was going to be about $450 a month. Wow. So it's almost a factor of 10.

It was for me. And so how do people get sold on this originally? What does it look like when someone pitches this to you?

Is it commercials on TV or? Oh, yeah. It looks like a lot of whiteboards.

I have seen this on TikTok, believe it or not. There are these finance dudes, even women-- Do they brand themselves as just like a general purpose-- Yes, like a financial advisor, and it usually involves them sitting at a whiteboard doing a lot of math and saying, but what if you get this and then you put this in here, and how could you lose out? You're getting both, this-- Really selective information.

Yeah, absolutely. And when you don't have, again, a lot of confidence in entering into buying an investment portfolio for yourself or picking things, this can kind of feel turnkey. You get something that you want plus something else you also want but feel pretty intimidated to getting into yourself, so it kind of greases the wheels.

I mean, sometimes it's nice when one-- do they want you have to deal with one agency to do a suite of things? 100%. That can be a relief, but it's such an outsized-- there's such an outsized impact on your finances and you're losing so much that at some point it becomes you're being scammed. You're being tricked by that person.

Pretty much. So if you find yourself tempted and you're looking at both of these avenues, what you also need to know is that what is waiting for you as an opportunity if you go the term path and you still want and need to invest-- to grow your wealth you have to invest on some level. If you're up for doing this yourself then just look at the raw numbers and see what is available to you if-- instead of buying a whole life insurance policy where you don't have any choice of what is going on and your returns are most probably going to be terrible, what if instead you just invested the difference between what the term life policy is going to charge you and the whole life policy is going to charge you into a general basket of mutual funds?

And then you get to pick where your money's going too. Exactly. You definitely have a lot more control over that.

And if you look over a long term period about what the general US stock market could give you, you're looking at somewhere between 7% and 10% return over-- that's, like, a 90 year spread if you're looking at that. So you can tell this is a big difference between 2%, not even keeping up with inflation, between 7 to 10. But most people do not know that 7 to 10 number.

I didn't know that until this moment. Yeah, they don't have anything to compare what this person is offering them. Yeah.

This can be particularly difficult for lots of different kinds of people for lots of different reasons. You can be targeted specifically with predatory financial services because of your race, because of your parental status, your marital status, your education level. It can be for things that you have no control over, such as disabilities or even just neurodivergence or any mental health problems.

Information like this is extremely available and is precisely how companies like this find their latest victims. What kind of a chance do any of us, with any of our flaws, stand against a perfect system relentlessly trying to take advantage of us? Here's more from Daniella Flores on what they experience when it comes to predatory targeting.

I was just trying to figure out how to survive in that kind of academic culture with back then what people would call-- back then, at least, they called it a lot, to me, a learning disability. I had ADHD, which I later found out was a lot more than just ADHD. But back then it was all seen as learning disability.

The teachers didn't want to really deal with it a lot of the time. So I was just trying to make it through school. The money part was something I would deal with afterwards.

And at the time, I was also working three jobs when I was in school so I was spending a lot of time just in survival mode. I had some, I guess, financial trauma around that whole situation mixed with some work trauma, I guess. And I feel like that debt consolidation company is definitely predatory, those debt consolidation companies like that where I know that they probably got my information.

Because right now online-- and people's information is probably passed around for profit a lot, and they probably could see how many times I wasn't making my payments or how many times I maybe deferred my loan or how many times I went online and made purchases for other things because they could use that same financial information, maybe track that, especially maybe my history of shopping online. Just know that wherever you do anything online and anytime you make a financial transaction, that data is probably not 100% protected. Your financial data might be, but your data like your name, your address, your email address, that's not protected.

So any time you say, accept cookies, or that you give permission to a certain site to maybe alert you on something, you're giving away your data. Any time you sign up for anything with your email address you're giving away your data, and that data could be sold to somebody else. And I think that they use that data to exploit young people a lot.

So yeah, that's a big deal, and best believe these things are being-- This is so predatory. It is predatory, and the thing is, lots of people are talking about how bad this is. Dave Ramsey, of all people, rails against this stuff.

Ramit Sethi also, he hates this stuff. I mean, there's no lack of content out there telling you that this is a scam of sorts. So why are people selling it?

Commissions. The commissions on these policies is why they're being pushed. So the commissions to the agent who was selling this product are usually 80% to 100% of the annual premium upfront.

Wow! Yes. Plus an ongoing 3% to 5% of the policy every year after that.

So this is a massive moneymaker. And this is why we have these big stars in our eyes because we didn't know any better when we're coming into this new opportunity for my husband, and we're walking through the parking garage and there's the Tesla, the Mercedes C-class, and we're like, wow. People are living good here.

We can help people get out of debt and drive this? How amazing. This is how.

This is why. This is why. And it's also, I think, a very hard sell for people who want to get out of this industry and do something a little different.

It's a really hard pill to swallow to give up those commissions because you cannot stay. Once you leave, you're done. Yeah.

I mean, it's similar to-- I mean, it is not structured like, but it is similar to an MLM culturally where once you're in it you're making so much money and there is so much incentive to never leave, or instead of leaving, to just get quiet and never-- even if you were to discover what's really happening and the intricacies, why would you ever speak out? Exactly. So I do want to say that there are a few examples that I have just seen personally where whole life insurance can make sense.

If you have somebody who has a special needs child who will always need support, even in their older ages, sometimes that may make sense if you have the cash flow and everything else is OK. OK. And even sometimes for higher net worth individuals who are looking for other alternatives, maybe.

But these are like-- Such specific use cases. So specific. So term really tends to make sense because you have to think again about, what are you actually insuring for?

You're insuring against the possible loss of income, and you only make income during a certain portion of your life, your earning years. And then at some point, if hopefully you've been financially planning wisely, you get to the point where you are now self insured. The amount that you have saved up in your various retirement accounts and maybe you own a home or something like that should be more than enough to cushion the blow for any dependents that you might have at the time.

So that is whole life and the many pitfalls from it. What a nasty beast. Yeah.

Here's some final reflections from Daniella Flores on their financial journey so far, looking back on what happened to them, looking forward to the future, and some advice for people who might be making huge financial decisions right now, specifically like college. I went to school for-- eventually I settled on computer science for my major. And that's what I got my bachelor's in sciences was computer science and website development and design, which is something I finally found a passion at the time because I could use my love for art within this technology medium.

And I remember looking at internships and jobs at the time, and everything had a bachelor's on it. If you didn't have a bachelor's degree you couldn't get a job, and that was very much the attitude back then. Tech companies and the tech world, at least from what my field was, weren't like what they are now where people can go into certifications or do bootcamps or do programs for 24 weeks and then help get placed into a job.

Now everything-- I feel like what I did at least in the tech world, I wouldn't have been able to do it at that time without a bachelor's degree. However, fast forward to now, I might have been able to. I don't want to say that college is not worth it.

However, now if I was a student entering the university, there is no way in hell I'd be able to afford it. Which is saying a lot because it's like, where I am now in my 30s, I can't afford that. How is somebody who's, like, 18-- when I went into college, I was 17-- how are they going to afford it and their families?

Are we just expecting for them to afford it? When I look back on it, the number one thing I wish I would have done first was to not go straight into that university culture. I wish I would have started with community college because I would have been able to pay my way through that first and then figured out what I wanted to do from there.

How that looks from location to location is very different, though, and the schools that are available to people. And I guess now also online schools maybe there is more opportunity for that. If you're making a big financial decision around schooling, definitely do your research.

Ask people maybe that went there. Or if it is a loan consolidation company, like with me too, if one does reach out to you-- and I remember googling them too, OneFile scams and reviews, and back then I couldn't find anything until I was already into it and then I found that one forum on the student loan planner website. But to put company's information into Google with the keywords of scams, reviews, horror stories, any kind of keywords you can put in there to maybe find any kind of information online about anybody else going through that similar financial decision.

There's a lot of social pressure around finances and just how we live our lives and make a living. Don't try to give into someone else's version of success, because in the end you'll just be burnt out and miserable. This is coming from someone who is-- I just got out of 11 years in tech and I actually just left that career to be self-employed and freelance now, and I am happy where I am at.

And at the longest time I was climbing a ladder towards a dream that was never mind to begin with, but I didn't have the mental capacity at the time to really stop and think, what do I really want? But in my older years I finally had that time. But just do the best you can with what you have and try to talk to other people, do your research, and make sure that the dream you're going for is yours.

You can find more from Daniella Flores at @iliketodabbleblog on Instagram and @iliketodabble on all other socials, as well as So I think the main problem with these particular services that we got into today, it isn't that they don't do what they say they're going to do. It's just that they're definitely not as necessary as they purport it to be.

They're trying to expand their customer base and audience beyond the actual people who, in their highly specific cases, might benefit from this to people who don't necessarily need the services or necessarily understand what kind of services they're signing up for, and that can be really where the problem is. If financial education was at the level that I think it should be at this country, I think there would be a lot less opportunity for these things to be offered out there. Well, in the future when I am in need of financial assistance, I'm going to turn to somebody who I know has my best interest at heart.

And hopefully now I'll have some of the tools to avoid signing up for services that I don't necessarily need. All right. Well, thank you for taking me through this terrifying world.

As always, You're welcome. Happy to be your tour guide. And thank you so much for listening, by the way.

Thank you for taking the time with us. All right. Well, we're out of here.