I recently spoke to someone who was searching for a way out of his dire financial situation. He told me that it began when he joined a network marketing business from a product based company about six months prior to our conversation.

He spoke about spending approximately $17,000 on massive amounts of products which filled his basement and garage. (That is a story I thought was a fable made up years ago…never did I think I would actually hear it from someone who actually did it.) Apparently the more he purchased, the better the deal. He was also encouraged to spend money on Google Adwords and other advertising to help move the product. His ad expenditure over $3,000, product sold $600.

Not only did he completely drain his savings but he maxed out his credit cards as well.

Could this happen to you? That depends on you and your ability to separate reality from emotions (the hype, the pitch).

If you decide to get involved with a network marketing / home based business opportunity, do not fall victim to the point of a sale upsell. This occurs just after you sign-up and are encouraged to spend even more for a special offer.

At this point you are at an emotional high and will almost buy anything to enhance your new business. Decline it. If your new business is going gangbusters as is presented to you during your business presentation then you could well afford to make any upgrading purchases AFTER you see it putting money back into your pockets. If, however, your new business does not gain profitability in a timely fashion and you are considering quitting, all you have paid is your original cost of entry…no upgrade expenses.

Another area that you can get caught up in is advertising. Online advertising is usually a better value than any offline advertising medium such as newspaper, tv or radio. Online advertising also has the benefits of being effective and immediate however it can become extremely pricey.

For example when you first start out if you decide to participate in Google Adwords, be sure to set conservative spending on a daily basis. You could be bidding $5 or more per click for some keywords to gain first page Google visibility. If you were to get 5 clicks on your Adwords ad at $5 per click that would be $25 per day or $775 per month. This is only a click on to your website, no guarantees they will linger to read what you have to offer them.

If you are encouraged to buy books, tapes, collateral material (such as brochures, prospecting tools, cd's or dvd's) again, be very conservative in your purchases. Most network marketing companies have excellent online resources to save their representatives from overspending on these items.

Bottom line: be as cautious as you can spending for your new business as you are when you do your weekly food shopping. Remember, however, that it is a business and like any other traditional business, your home based business needs cash to get it off the ground. Just do not overextend yourself and spend yourself out of business.