Dad's $10K "Passive Income" Dream on Etsy Has Made $0—And Destroyed His Family's Credit Score

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A college student watching their father spiral into debt-fueled delusions about crafting wealth has become a cautionary tale about the dangers of get-rich-quick schemes in oversaturated markets—and what happens when YouTube fantasies collide with credit card reality.

The story, shared on Reddit’s r/povertyfinance community, centers on a father who racked up thousands in credit card debt buying laser engravers, Cricut machines, and craft supplies after binging “shady YouTube videos” promising easy money on Etsy. The kicker? He hasn’t sold a single item or made a penny in profit, according to the post.

“He relies on watching these videos that claim people make thousands just on Etsy through ‘passive income,'” the original poster wrote. “He believes his business will make money overnight and pay off everything.”

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The Sunk Cost Spiral That’s Bankrupting Families

What makes this case particularly instructive isn’t just the father’s poor judgment—it’s how the psychology of sunk costs can transform a bad decision into a financial catastrophe.

The father purchased equipment including a laser engraving machine, multiple printers, and even a $300 machine he’s never used. He constantly orders supplies from Amazon and hits sales at Michael’s craft stores while paying for a monthly website that hosts zero products. When his wife questions these purchases, he becomes defensive, insisting everything is “necessary to start the business” and help him “do more.”

The real damage extends beyond the debt. The family’s primary business is failing, the mother faces potential layoff, and their credit score is “shot”—making it impossible for their college-age child to secure student loans without a cosigner, according to details shared in the r/povertyfinance thread.

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Why the Etsy Dream Is Dead for Most Sellers

Experienced crafters responding to the Reddit post painted a bleak picture of today’s handmade marketplace reality. The craft fair and Etsy markets are “completely flooded” with similar products, multiple commenters noted, making differentiation nearly impossible without exceptional artistry.

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“The market is overrun,” one successful seller wrote on r/povertyfinance. “Many booths now feature the same items, and success requires unique, high-quality work.”

The problem is compounded by cheap resellers using sites like Temu and Aliexpress to drop-ship items on Etsy for a fraction of handmade prices—often using identical product images. According to the discussion thread, new entrants typically buy generic design files and machines but lack fundamental artistry, resulting in “a bunch of generic designs” and “piles of plastic crap no one wants.”

One commenter pointed out that laser engraving equipment succeeds primarily as a supplement to existing businesses with established client bases—not as a standalone “side hustle.”

The Red Flags That Signal Deeper Problems

Beyond the financial recklessness, the original poster noted concerning behavioral changes. The father has become “more scatterbrained and forgetful recently” following a sepsis infection and prolonged sleep deprivation, with a family history of dementia raising additional concerns about impulse control similar to ADHD or early cognitive decline.

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His stated business goal—”to be the best at everything”—lacks any achievable metrics or market focus, according to the Reddit post.

What This Family Should Do Next

Community members on r/povertyfinance offered practical advice focused on damage control. Immediate steps include returning unopened Amazon purchases, having the mother take control of bill payments and potentially restricting the father’s credit card access, and setting a hard deadline for the business to generate profit or liquidate assets to pay down debt.

For the college student, the overwhelming consensus was clear: prioritize self-reliance through scholarships, community college transfers, or immediate employment rather than depending on parents who can’t cosign loans.

The bigger lesson? When someone promises passive income requires nothing but buying equipment and following their system, run the other way—especially if you’re funding it with debt you can’t afford.

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This article Dad's $10K "Passive Income" Dream on Etsy Has Made $0—And Destroyed His Family's Credit Score originally appeared on Benzinga.com

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