United First Financial Money Merge Accounts: Scam or Legit?
A reader recently sent an email asking about a program United First Financial runs called a Money Merge Account and whether it was legitimate. United First Financial promises that the program, which costs $3500, would have you pay off the mortgage in one-third to one-half the time it normally would take. Knowing nothing about money merge accounts and knowing a little bit more about simple math, I smelled a fat $3500 scam brewing. The only scenario in which I could see $3500 cutting your mortgage in half is if you had a $7000 mortgage. But, setting my mental scam alerts aside, I did some more research about the plan.
Apparently it’s a fancy name for an accelerated mortgage repayment scheme. The first step in the money merge account is to take out a second mortgage on your home, a home equity line of credit. Then, what you do pay your entire paycheck towards the first mortgage and withdraw money from the HELOC to cover your expenses. You save a little money because the interest on a HELOC is calculated based on average daily balance rather than the final monthly balance. This lets you pay off more of the mortgage at the beginning of the month and then be charged less interest on the HELOC. (this assumes the same interest rate, which is a big flaw)
However, the plan also has a lot of other assumptions and flaws.
- It assumes that your HELOC interest rate will be the same as your first mortgage interest rate - very unlikely. The bigger the HELOC rate, the less you save on that difference.
- It assumes a single monthly paycheck so it’s a plan that loses some of its power if you are paid irregularly or every two weeks.
- One big flaw is that there is never discussion of HELOC fees. I’ve never opened a HELOC but I imagine it’s not free.
- This plan requires that you don’t save at all for anything else. Since your entire paycheck goes towards the mortgage and you withdraw expenses, it penalizes you drawing on the HELOC for non-essentials. Why pay $100 towards a 6-7% mortgage and then borrow $100 from a 10% HELOC?
- Finally, as if all those weren’t enough, you have to pay $3,500 for a program to help you do this!?
In researching this article I researched a lot of sites and they were nearly unanimous in their opinion that these types of programs are not worth the money (not surprisingly). They’re not scams in the sense that you pay your $3500 and they disappear into the night but it’s something you can do yourself.
This begs the question, should you use it to force discipline? I could justify paying $100 to enforce discipline because it can save you quite a bit in the long run, if you can overcome the failings, but $3500 is ridiculous. If you have $3500 and you want to pay off your mortgage sooner, send a $3500 check to your mortgage company. (if you want a legitimate and easy way to pay off a mortgage faster, consider making mortgage payments every two weeks)
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There are 464 comments, add your thoughts now!
Hey Jim,
Trent over at the Simple Dollar did a post on MMAs. You should browse through some of the comments… all 1300 of them. Some of the MMA sales people started posting comments… gets pretty heated, but also very interesting.
link
Honestly I find this post a little bit close minded and overall disappointing.
I appreciate that you took some time to browse the internet and try to get an overall feel for the Money Merge Account, but you are not in a position to brand their product. Untill you have actually tried it or know someone who has.
I don’t have any ‘vested interest in denouncing your post, I just have a little bit of a personal edge - My parents are using their product and I honestly believe it may have saved their marriage. The overall package that they offer goes beyond their software. Their customer service has leaned over backwards for my computer illiterate parents and really educated them to turn their life around…
My Father explained that he has had the opportunity to meet the primary owners of the company -he stated that they had a tremendous amount of integrity and that there was a reason the company has seen so much success. (He attributes some of their humbleness to the fact that the owners are LDS “Mormon”)
Anyways; I realise that your post was just your opinion and I truely hope that it was not written in hope that you would recieve some of the traffic that the other blogs have.
I’ll stay subcribed in hope that you’ll keep an open mind and let your perspective grow as you eventually identify that there are those out there who are benifiting from the program that otherwise never would have. I think you will see this in the near future….
In follow up, I will corrispond with you through e-mail if you are willing to speak to a member of my family (Who are not selling the product) and ask them their honest opinion.
Watch me get flamed in the comments - but I am sure if I ask one of my family they will agree to corrispond with you and describe their experience in detail.
If you have someone who wants to email me, by all means please do. I’m always open to hearing other opinions.
Jim, appreciate your willingness to hear other opinions, let me ask around my family and see if they will be willing to discover your blog and take the time to give you their opinion.
Might take a few weeks, my family is rural….
Thanks.
I participate in the Simple Dollar ongoing discussion. The bottom line is that such a dramatic reduction in mortgage payoff would require that of $5000 net income each month, that one be able to pay an extra $1000 toward the (now only $1200/mo) mortgage. So, all MMA sites’ examples show that if you pay $2200/month against the mortgage which now has a monthly due amount of $1200, you can pay it off super fast. Think about this one point. After all expenses, including the regular $1200 payment, retirement savings, etc, etc, how many people have this percent of their net income still available to pay down the mortgage? And if you did, why not refinance to a 15 yr (or 10yr) loan which would get a much lower rate?
Yes, the SD board is very lively, and heated.
Joe
BFP, I’m with you on this one.
I’ve looked at the MMA and actually have been solicited to “offer” this tool to my clients (I’m a Realtor) who would love me after paying their mortgage down soooo much they would refer tons of people to me. Of course, I would receive a nice little paycheck if they bought it.
It’s a discipline thing as far as I can make out. If you want to pay ahead on the principal of your mortgage, just pay more.
A couple of other assumptions the MMA misses. HELOCS tend to have floating interest rates tied to the prime rate. HELOCS tend to have pre-payment penalties especially if the bank covers your closing costs or finances them into the loan. Emergencies (the car breaks down, dental bills, household issues like plumbing or electrical problems, etc.) may arise forcing additional withdrawals from the HELOC since you’re whole paycheck is going to your first trust. Thus, you’re paying interest on something that you might have paid for with zero interest.
You’re right. It’s not a scam in the sense that someone takes your money and runs. It’s a scam because you’re paying way too much for a product that teaches a convoluted way to pay down your mortgage and provides some hand holding. It’s like paying a Rolls Royce price for a Volkswagen.
Jim: I missed this in my earlier reading. I think you’re right on here - $3500 to have someone else enforce discipline for you is ridiculous. You could use that money to pay down principle, close on a 15-year loan, or any number of other less risky options.
Cameron: I can only say that Jim hasn’t glossed over any important facts in this article. He’s laid out the basic, important facts related to making a decision for/against this type of product. No one needs to have “actually tried it or know someone who has” in order to use good judgment. One simply needs to evaluate the facts surrounding the product and draw the appropriate conclusions.
It’s good to hear that the company is reputable and has been nice in working with your parents. Of course, that doesn’t make their product (I use ‘product’ in the narrow sense of the word) any good. In fact, being nice to people is one of the best sales tactics. It’s not wrong to be nice to people, it’s a good thing — but of course it doesn’t make your product any better.
“My Father explained that he has had the opportunity to meet the primary owners of the company -he stated that they had a tremendous amount of integrity and that there was a reason the company has seen so much success. (He attributes some of their humbleness to the fact that the owners are LDS “Mormon”)”
Utah is a great place to sell something that requires a great deal of faith. For example, Mormons believe that Native Americans are descended from a lost tribe of Israel. Never mind that Native Americans were here long before those biblical events supposedly happened and that DNA proves otherwise. Maintaining that belief in the face of overwhelming evidence to the contrary is exactly the kind of faith you need to believe in the MMA.
Craig,
Yes it is true that many Utahns have been tricked into bad business schemes and that many of us have a great deal of faith into our religious beliefs. Also, that this faith in others to be honest people has hurt us before is true. But your obvious opinion (one sided I would wager) about LDS beliefs is the exact same thing just in reverse fashion that you commented on. You seem to have a lot of faith in your DNA theories, but limited information on what LDS people really believe. Yes, the believe the native americans are descended from the tribes of isreal. However, this is not just based on “biblical events”. They also believe that these people you mentioned found evidence of past peoples, that they were not the first to inhabit the americas. So please get your information correct before slandering various religions. But I am sure you are always right, and where never tricked when you trusted in something.
By, the way, I am one Utahn that will not fall for the MMA trick! Thanks for the previous posts
“But your obvious opinion (one sided I would wager) about LDS beliefs is the exact same thing just in reverse fashion that you commented on.”
No, it’s not. I have ridiculous amounts of peer-reviewed scientific evidence. You have a book dictated by a 19th century con man and a bunch of very frustrated or excommunicated Mormon anthropologists . I don’t require “belief”. You do.
Don’t think I only have it in for Mormons. I think all religions are stupid.
But this is not about Mormons. This is about UFF, which requires a similar, cult-like ability to look past all contradictory information and believe that a HELOC and a series of computer-recommended transactions will magically create money and accelerate your mortgage.
The $3500 on the program is a waste of money. You are better off just use common sense, and if you have extra money to pay towards the mortgage every month then do it , this will save you big and that will not cost you anything.
Glad to see that I’m not the only one being “negative” and talking sense about this overpriced, overglorified software program. People can pay extra on their mortgages for free. No $3,500 fee necessary. And for those who say that $3,500 helps bring discipline to the consumer… Anyone who needs to throw away $3,500 in order to become disciplined has serious problems.
I am always amazed how people can comment on software they have not seen. I have been in the mortgage business for 25 years, know all of the tricks to paying off mortgages early, and have NEVER seen anything as good as the MMA. Noone here is addressing the fact that not only will your home be paid off in record time but ALL of your debts will paid off in record time and with having as little as $50 of descretionary income after all your dry cleaning, going out for dinner, etc. It does not require a line of credit or even a credit card, just a simple savings account.
Plug in an extra $50 a month in your mortgage payoff calculators and see that would only generate a couple years savings in payments. Plug in that in the MMA and save15 years and pay off your credit cards and car!
Before you make comments, please take the time to check out the software. I too was extremely skeptical being a mortgage professional for a quarter century and a mortgage software designer and reseller. The amount of code written to do all the necessary calculations to help people make the best decisions when their situation changes due to an illness, loss of job, or necessary purchase is staggering. Have an agent show you version 4 of the software. It is awesome, and the $3500 is for free upgrades and support until the loan is paid off and it is guaranteed to work or your money back according to their agents. No, I dont have the software and I am not an agent. My house was paid off when I did some real estate flips in the early 90’s. When I do move up to a larger home, I will be buying the software.
Ernst and Young just gave them the regional award for best fiancial software and they are up for the national award too. Personal Investor Magazine just gave them an award for the best new software.
A scam is something that you pay for that doesn’t work. Looking at all that is being said on the web about this product, the only thing I see is that they think it is expensive. Noone ever says it doesn’t work . Because it does…
I really don’t understand why it is that some people seem to get so worked up about this program. Is it simply out of a fear of something that is “new?” Is it that they have their own agenda? Or are they well meaning, but just uninformed?
There is really nothing here that is worthy of such controversy.
Is a $3500 investment in ones financial future worth it to some people? … yes.
To others … no.
It is that simple. Some people think this program is pricey. That does not make it a scam. We all have to make our own judgments based on how well we know ourselves, what our strengths and weaknesses are, and what our goals are.
Sure, some so-called “experts” bash the program. However none of the “bashers” (including Dave Ramsey, as he admitted very recently) have actually SEEN and used the program. They made their judgment based on a look at whatever they could find in the way of marketing materials or by reading others opinions and information on the internet blogs (we know how accurate/scientific THAT is).
I don’t have a problem with an expert “reviewing” a program. But don’t you think that they should do it the way the car reviewers do? The experts that review cars drive the car for a number of months so they get an accurate feel for it’s features and performance. They DON’T review it by looking at the brochures and walking around it simply “eyeballing” it. In fact, in the scientific world, you would give whatever it is to a group to use, and you would also have a “control” group who did not use it, so you could compare the results of the two groups.
In my opinion a true “professional” would never risk their credibility and reputation by offering an opinion about something they have not inspected, seen perform, and actually used.
Lets be honest here… Do any of us really think that is a smart way to form an opinion?
Here are some experts that HAVE fully reviewed the program… by using it, “test-driving” it, etc. After looking at all the various features and benefits provided by the program (which I won’t list here for fear of getting deleted as an “advertisement”), and the support that United First Financial provides it’s clients, they said this…
“Impressive” …Fred Skousen, PhD, CPA and former Dean of the Marriott School of Business at Brigham Young (I can email you the entire interview)
“Leader in the industry” & “Editors Choice Award”…Personal Real Estate Investor Magazine. (I can email you the entire review - it is in the magazine)
“It works, 3 of us at the station have been using it since Nov” …Channel 3 News, Las Vegas
” Outstanding Company of the Month” …Broker Banker magazine
“Entrepreneur of the Year” …Utah Region of Ernst & Young (awarded to the founders of UFIRST)
Other experts who have either endorsed the program, or are actually USING the program themselves, include…
Douglas Andrew, author of the best sellers - “Missed Fortune”, “Millionaire by Thirty” and “Last Chance Millionaire”
Mark Victor Hansen, author of “One Minute Millionaire” and “Chicken Soup for the Soul.”
I’d be happy to provide some “con” reviews by experts who have USED the program… but there are none to be found so far. How do I know they have not used the program? Because they have never included any statement that indicated that they had. Because that would really boost their credibility, I am sure they would have made that statement if they had actually used it, don’t you?
We still see over and over again on the internet that the people with an opinion of the Money Merge Account fall into two camps.
Those who are using it.
Those who are not using it.
Oddly… there are no “nay-sayers” among the folks that are using the program. They all seem to love it and obviously think their $3500 was money well spent on a tool to do some math, help them be more financially disciplined and to make better financial choices (There IS one “mother of someone” who said her daughter got in worse trouble, but do we know that as fact when stated in an anonymous blog?, and if it is true, was that because of the program, or because of her own actions/inactions after she got on the program? Did we hear from the daughter, or only the mother with her secondhand information? And, do we really think that this is going to work for everyone? Even those with pathological spending issues? If someone has that kind of pathology… .how would the salesperson know?).
I think that most people are smart enough to know that if they are disciplined and consistently send extra money to their mortgage they are going to save interest and pay off faster. United First Financial has even said that people can DO THIS THEMSELVES provided they are disciplined and stick to their plan. They say this right on their web site.
Statistically about 4% of people do that on a consistent basis. Those people have discipline… good for them. They are not the market for UFIRST.
The rest of us… (96%) probably have good intentions. We mean to do better, we WANT to do better, and some of us have even set up a plan that we have tried to follow on our own.
So why are we in so much financial trouble in this country?
Why do people refinance over and over to cover consumer debt?
Why are people getting foreclosed on in record numbers?
Why do we have little, or nothing, in our retirement accounts?
Why do we stick to our plan only sporadically, or drop it all together?
If you keep doing what you have always done, you will get what you have always got.
Or as Einstein said… “Insanity is doing the same thing over and over again and expecting a different result.”
The Money Merge Account is simply a different way to manage your finances. It DOES have a budgeting program built into it. It even has the option of being able to check that budget via text message on your cell phone from anywhere, anytime.
The software is like having a “Financial GPS” and it does the most optimal job possible paying off your debt with your EXISTING budget (that is why it requires no lifestyle changes - if it works for you, it is doing it using the budget you already have). Before you make a decision to use the program an Agent will show you what the program can do with your EXISTING budget. That is tied to the Money Back Guarantee (go ahead and ask for it so you can read it). The average client can pay off their mortgage (and or debts) in about 1/ 2 to 1/3 the time without any significant lifestyle or budget changes and an Analysis will show that before the buying decision.
Of course, when people have the instant feedback (instant gratification) provided by the program, they often DO make changes that they might not otherwise have been motivated to make. If they do, the program can perform even better.
After 6 months to a year on our program, our average client is also on track to pay off 15-25% faster than their Analysis showed.
This is a GOOD thing… so why do the detractors knock it? Because you can do it yourself? So why aren’t we?
We know that 95% of United First Financial clients are logging in monthly to use their software. It used to be 98%, but we have had many people who have already paid off their mortgages and debts with the program.
So 95% of people - motivated enough to stay on track with the program.
compared to…
Just 4% who are motivated enough to do it consistently on their own.
Someone on a blog protested that doing the program required that one “get a handle” on their bills/debts and cash flow and stay on top of them (they are correct - that is necessary for the program to work and it takes, on average, 10-20 minutes a month). They said that was “too much trouble.” So, obviously they would probably be in the 3-5% of people that would NOT be helped even WITH this program (like the daughter of the mother?). They should probably just give up… nothing is likely to improve their situation. But why do people like that guy bash something that could help the next person? Ever see crabs in a bucket? Ever notice that no one likes to drink alone?
The question is… which group do you think YOU would fall into? Only you know yourself well enough to answer that question.
Your financial stability is the foundation for everything else you do with your life. It is, sadly, also the area where most of us have the least amount of education, knowledge and discipline. Partly that is because playing with math, spreadsheets and numbers is not “fun” for most of us.
If you think you can do it on your own… TRY it. If you can stick with it and are getting good results…. GREAT… then your question is answered. If you find you need help… there is no shame in looking for it.
Why do United First Financial clients get such good results?
One thing I hear over and over again from clients is that they get “addicted” to the software. One said it is like a video game for his finances. So, if we take something that is GOOD for us, and make it more fun…. do you think that might make it more likely we will stick with it as well?
Is investing $3500 in a tool to help you make better financial decisions, to do the math for you to get the most rapid debt pay down, to provide instant feedback so you can stay motivated and on track… is that worth it for YOU?
It is a choice that only YOU can make for yourself.
There is a lot I could say about this. Frankly I’m both amused and dismayed at so many comments on the internet about a product that are written by people who know so little about it. So here I’ll just comment on the 5 points cited in the article above, “United First Financial and the Money Merge Accounts: Scam or Legit?
1. It assumes that your HELOC interest rate will be the same as your first mortgage interest rate - very unlikely. The bigger the HELOC rate, the less you save on that difference.
This is a complete misrepresentation of the how the system works. One, it is not true that the program assumes the interest rate will be the same as the first mortgage. Secondly, it is not necessarily unlikely that it will be the same or higher. Third, it makes very little difference what the HELOC interest rate is because the interest calculated on the HELOC is based on the average monthly balance which is a completely different application than for a traditional mortgage. So this statement reveals no real understanding of the product or its application.
2. It assumes a single monthly paycheck so it’s a plan that loses some of its power if you are paid irregularly or every two weeks.
This comment is ridiculous. It doesn’t assume this at all, and in fact the more frequently you are paid the better the system will work for you. But even if it did assume a single monthly paycheck, and you’re paid every two weeks or every week as I am, then all you would have to do is hold your money in another account and deposit it into your HELOC once a month.
3. One big flaw is that there is never discussion of HELOC fees. I’ve never opened a HELOC but I imagine it’s not free.
The truth comes out on this one. Of course if you’ve never opened a HELOC you don’t have any concept of their features. I have opened a HELOC and guess what, there are no fees whatsoever. So the “one big flaw” turns out not at all to be a flow because whether you can imagine it or not, it is free.
4. This plan requires that you don’t save at all for anything else. Since your entire paycheck goes towards the mortgage and you withdraw expenses, it penalizes you drawing on the HELOC for non-essentials. Why pay $100 towards a 6-7% mortgage and then borrow $100 from a 10% HELOC?
Again, this is a complete misunderstanding of how the system actually works. You actually DO save money, a lot of it, because you are working toward paying off your home mortgage at a greatly accelerated rate, thus saving tens of thousands of dollars in interest payments and future monthly obligations. And you’re not borrowing at a higher rate at all. So the question should be, why pay mortgage interest every month for many years when you can get out of debt much quicker by using a money merge account system?
Finally, as if all those weren’t enough, you have to pay $3,500 for a program to help you do this!?
Well first, all of those are fundamentally flawed assumptions, as I have indicated. Secondly, $3500 is a small price to pay for a system that will pay off your home mortgage quickly and deliver you from becoming one of the ever increasing victims foreclosure.
I am old enough to remember when the Individual Retirment Account (IRA) concept hit the financial market. For about ten years, up through the mid to late 1970s most financial experts said it was a flawed concept. Many called it an outright SCAM. I don’t think anyone is saying that about IRAs today. I’ll just conclude with a quote from Einstein. “The significant problemes we face cannot be solved at the same level of thinking we were at when we created them.” And Lord knows we have created a mortgage payment plan nightmare that is now resulting in tens of thousands of people facing foreclosure. Had they used an MMA system to begin with many of them would now own their homes free and clear.
Dave, it is obvious you have never seen the software. Not the analysis, the software that produces it. I bet if you saw version 4 of the software you would be impressed. Why did you just click an paste your previous post? Most, if not all of your comments are not accurate at all.
James,
Huh? I’m confused. This was my one and only post and I was responding to the four points of the article, and how inaccurate they are. I have the software and I use it. Reread my post.
Man Oh man!! This is the best invention since macaroni and cheese!! I just started the MMA and Im absolutly amazed at how this system works. Im a cleaning ladie and I get the concept. What is it some of you people do? I wonder how many mortgage lenders and bankers are posting here! This system is pretty much their worst night mare!! Really!
Patty,
I’m pleased that the MMA is working for you, as it is for me. Don’t be dismayed, though. There are plenty of naysayers who delight in presenting what they consider to be convincing math that proves the system doesn’t work. It’s probably best not even to engage in dialog with them because most resort to personal attack and question anyone’s intelligence who doesn’t agree with them.
Just know this. It’s not magic and you have to follow the promptings and be disciplined to get the best results. You also need some discretionary income to get optimum results. The purported financial “experts” who frequent these kinds of blogs will tell you that you are wasting money and that you can do this yourself. My answer to that is simple. You can. The problem is very few people do. That’s one reason why so many homeowners are facing foreclosure. It’s beyond me why anyone would post “warnings” and other negative information about a product designed to help consumers reduce (and ultimately pay off) personal debt, especially when it’s working for so many.
“There are plenty of naysayers who delight in presenting what they consider to be convincing math that proves the system doesn’t work.”
We’d be delighted if UFF agents would use math at all. This is just interest, after all. It’s not rocket science. The simple truth is that the MMA trails simple, DIY prepayment. That is, just send what extra you can to the mortgage with each mortgage payment. You’ll beat the MMA by months - primarily because you won’t have paid $3500 to an agent. If you buy the MMA, you’ll be paying interest on that $3500 for the life of the mortgage.
The “naysayers” are not selling anything. UFF agents are.
Well Craig, it is quite apparent that you are another one of the naysayers who likes to comment without seeing the software. There is no way you could duplicate the effects of using the software yourself. Go ahead. Take 25,000 in credit card debt and a $200,000 mortgage and $50 (fifty dollars) in monthly disposable income. Lets make it easy and say that all the credit cards are exactly the same rate of 11%. And in year 4, you need braces for your kid unexpectedly due to an accident that cost $4000. Do the math and tell me where you stand on all of your bills and mortgage in 75 months. I will give you 30 days to figure it out …
I am prepared to show all money movements and calculations along the way. If you will do the same (and not just blindly proclaim “X years and Y months”), I’m happy to accept, though you haven’t provided enough information for a comparison. What is the mortgage rate? What is the mortgage amortization period? What is the HELOC rate? What does the HELOC cost? (give me realistic numbers from a bank offering that is not a limited time promotion) What are the starting assets (including checking account balance)? Answer those questions first.
Now, because I’m familiar with the software and the tricks, some ground rules:
1. $50 per month in discretionary income is $50/month. Not $50 every 4 weeks or $25 every two weeks. No freebie months with full paychecks going to discretionary income.
2. Income is paid half on the 15th, and half on the 30th.
3. HELOC interest is calculated by the average daily balance in the HELOC for the month. Mortgage interest is calculated as 1/12 the mortgage interest rate, multiplied by the starting balance at the beginning of the month. Just as it is in real life.
4. The mortgage payment, and any prepayment I show or any HELOC transfer to the mortgage you show will be on the 1st of the month. After the regular mortgage payment (derived from your answers on interest rate and amortization period above) After the mortgage payment on the 1st of the month is deducted, the expenses are divided equally between the 15th and 30th of the month (30 day months for simplicity). Say, $3000/month income? Make it something realistic. With $50/month in disposable income, this is a low-income family.
5. The starting HELOC balance is -$3500 to account for the cost of the MMA. I will take a 0% interest checking account. If I use an interest bearing checking account, it will get really ugly.
6. The braces are the result of a hockey fight and paid for on the 15th day of the 48th month. BTW, that $4000 accounts for 80 months of “disposable” income. You’re really cutting our family tight, here.
I think that’s the extent of your omissions. One doesn’t need to go into so much detail to beat the MMA, of course. You just have to send your available money above a (say) $500 contingency, that I will also maintain. The ground rules and clarifications are required to make sure one of us can’t just declare a number and not back it up.
Let me know if I’ve missed anything. If you want to follow a real calendar, I can do that too.
Regards,
Craig
Who said anything about using a HELOC? You must have not seen the software lately because you don’t need a HELOC. That was 2 software versions ago. You just need to open a savings account or get a credit card with a $200 or less line of credit or use what cards you have in this example we are working on. So we will not be using a HELOC.
Not only will the mortgage be paid down more than in your scenario, so will the 25k in credit cards. You pick the credit cards rates and how many credit cards you have to make up that 25k and mortgage balance and rate and lets start at 360 months amortization. Discretionary income, btw, in our definition, is $50 left over after paying all bills, dry cleaning, going out for dinner, gas, etc.
MMA is not a program for people with only a mortgage. Anyone can send in extra payments in that scenario and they would not even sell you the software if that is what you had. If you have not seen someones real situation set up in the software you can not possibly understand all that it does, especially for those with mulitple rental property.
The braces in this case will be no problem at all…
Ok, I forgot. The people have $500 in Checking and $100 in Savings to start with. Both are working so you tell me what numbers you want to use for their net salaries
$600 net? I assume the $3500 will come from credit cards? Or will this be “MMA Lite”? for $1795?
Is Google Spreadsheet OK with you?
$600 net, and lets use the worst case scenario and I’ll add $3500 to the cc debt making it $28,500 and you dont have to. The mortgage make the rate 6.5%, 360 months,200k loan. 6 Credit cards with a total debt of $25,000. He makes 4000 net, She makes 2000 net. $50 discrectionary income. Paid 1/2 of the above every two weeks. Taxes are 416.66 monthly and insurance is $60 a month.
PS. All credit cards will be at 11% with a current balance of $4750 for me, $4166 for you since you dont have to add the MMA fee in. Each card is maxed out at $4750 in credit limit so you dont think Im cheating.
Craig, you said, “The “naysayers” are not selling anything. UFF agents are.”
You’re wrong. Virtually every “naysayer” I’ve had dialog with is trying to get customers to by some product from them. Why else would they be trying to discredit MMA? Haven’t you seen blog entries with links to financial/mortgage broker sites from “naysayers?” As to your second claim, “UFF agents are” trying to sell something. That’s why they are agents. But your comment was to what I had written and I’m not trying to sell anything.
James,
The credit limit on the cards makes no difference to me. What is the interest rate on the savings account? I think we’re in the 25% tax bracket for interest income.
2.5%
Dave,
Which “naysayer” has something to sell? Calvin? Ellory? JoeTaxpayer? Tracy Coenen? Me?
I know I’m forgetting other people, but the loudest voices against this product are strictly against the principle of scamming vulnerable people out of $3500 with the promises of huge interest savings that can be easily beaten without the MMA. Whether the MMA uses a HELOC, a savings account, or a credit card, it still lags behind simple prepayment. (And UFF should be tarred and feathered for the suggestion of using a credit card to prepay a mortgage)
Personally, I’m here because a friend was almost scammed. He came to me before signing on, and I saved him $3500 plus interest. Calvin and others have similar stories. I derive no income from anything mortgage related. I’m a structural engineer, with a minor in business.
Traditional mortgage brokers have spoken out on personal blogs, but the MMA hardly effects them. The MMA doesn’t compete with mortgage brokers. Anyone who needs a mortgage broker to refinance their mortgage to cut payments doesn’t qualify for the MMA in the first place. UFF says so right on their website.
Banks don’t compete with UFF either. Banks will gladly give you a HELOC or a savings account or a credit card to use in conjunction with your MMA.
Perhaps you mean Dave Ramsey, because he has a book to sell? I know there is Sydney Financial Group and CMG and other smaller players on the landscape, and sometimes they make a quick comment on a blog, but most MMA “naysayers” also warn against these other companies. It’s all the same stuff, and it’s not worth the price, no matter what the price.
James, 2.5%? Where do you get a marginal tax rate of 2.5% from?
You asked me what rate the savings account would be at, I suggested 2.5%
OK, I though “2.5%” was a correction to the marginal tax rate I stated above.
Craig,
I submit. I guess you’re right about that point. But there ARE people who represent mortgage companies with links to their company site, some of which contain “flawed” information about MMA products. I can accept objective comments about MMA products, such as yours seem to be, but I do think terms like “scamming” are overstatements. Credit card companies offer misleading introductory rates to lure unsuspecting people every day, to make money by putting those same people in even worse financial condition than they are already. Is that scamming? If someone purchases a MMA product and improves his or debt position have they been scammed? I would say that’s subject to interpretation?
Dave,
“No change in cash flow” ring any bells? This and other claims by agents are the scam. The savings effects of the HELOC (or CC, or savings account) shuffle are vastly exaggerated, when it is the simple prepayments the MMA is directing you to make that are the cause of the savings.
It is absolutely disgusting to take advantage of financially illiterate people and take $3500 from them for the privilege of doing what they can already do themselves for free. The MMA is a terrible, inefficient, dangerous product. The way it’s marketed makes it a scam.
So what is the outcome????? I am anxious to here this.
Dave - still pretending to be an independent university professor with nothing to sell? I thought after being outed on other sites, you’d have run for the hills by now. Just in case others haven’t had the pleasure: http://www.u1stfinancial.net/davemoore
Are you still with Wealth Online Solutions or is it now Success Synergy Systems? I guess your “mega-analysis” has shows that a statistically significant percentage of MLM scams have three words in their name (UFF).
Just another deceitful agent.
Hi Jen, I just need time to set up the spreadsheet. James gave me 30 days, and I’ll need a chunk of that time to set up something that is transparent and leaves nothing to interpretation. I’ll set up the formulas, but I’ll need James to give me the MMA-directed money movements.
Right now, I’m too busy laughing at Dave Moore - UFF agent being busted online. You can have a few laughs, and examine the math the shows the inefficiency of the MMA, at The Simple Dollar, where Dave makes his introductions at comment #1352:
http://www.thesimpledollar.com/2007/03/03/money-merge-accounts-are-they-a-good-deal-for-home-borrowers/
Craig,
I can put you in contact with someone who already created a spreadsheet that shows the outcome of pre-payments, its quite nice actually and free. Email me @ tonymathews@TPMEnterprises.net
Truth. What is Wealth Online Solutions? Someone else already tried that approach. So I called UFF and they told my there are four people registered as agents with them with the name David Moore. I don’t know what their username is.
Craig,
You want me to give you the MMA-directed money movements? That’s the whole point of this challenge, isn’t it? Your said you could do it yourself but you need me to tell you how we are doing it?
Your going to find out quickly, how hard it is to figure out how and when to move the money to maximize the elimination of interest on the credit cards with only $50 in decretionary income. That’s why the sofware is such a powerful tool.
I will make it easier for you. You can take out the kid with braces at the 4th year.
James, the timing of extra payments is extremely easy. You can only apply extra money to your mortgage principle when your regular payment is due. All you do is send what extra you can. It is that painfully simple, and if you don’t understand that, why are you advising people about mortgages???
This was supposed to be a comparison of DIY vs. MMA - not DIY vs. my idea of the MMA. If I know the income and expenses in advance, I can brute-force the optimal transfers pretty easy from a HELOC, or use a more elegant numerical analysis. If we’re using a savings account at 2.5% and a mortgage of 6%, it makes zero sense to carry serious money in the savings account in the first place. The transfers will just be everything we are allowed to transfer.
You really sure you want to do this? You’re starting $3500 behind me, and anyone can see where this is going.
If all you are going to do is look at the calculations and backup I provide, and “declare” the MMA will beat my payoff dates, I’m afraid that won’t be good enough for anyone. I’m terribly used to UFF agents “declaring” their MMA will beat a simple DIY approach. If you aren’t going to back it up with money movements, I’m not going to bother spending a couple of hours preparing a spreadsheet.
That is exactly what I expected you to say. It would take you a lot longer than a couple hours if you could do it at all. I have my analysis ready and you have not even started. You won’t bother to do it because you can’t.
It never fails that when people like you say they will show us they can do it themselves or better than the MMA, they never do. You have the scenario and I even took out the braces to make it easier for you. If I increase the interest rate on the savings account it just gets better for me.
Come on, don’t use this excuse that you are waiting on me to show how Im moving the money. Im not asking you to show me how your moving the money. To make it even easier, just show me the total interest and principal you paid through that 7th year with $50 in desposable income on all those credit cards and mortgage. That shouldn’t be that hard and you will see that the MMA will beat you every time and it took me all of about 20 mintues.
Craig,
In regards to mortgage prepayment, do you simply write a check including whatever extra amount you’d like to pay off of your priciple mortgage and a note implying as much, or do you need to include a separate check?
Works either way, but being a mortgage servicer myself, it is easier if they make a separate check to identify the prepayment
James, You truly are pitiful. Preying on the financially illiterate, to hell you will go. The HELOC shuffle can only save you pennies, and only when there is a large amount of discretionary income, and never enough to justify the software cost. The numbers have already been calculated and UFF always comes out behind simple prepayment. No software needed, no calculations needed for doing it yourself. Just send what you can extra each month, not complicated at all! No cost at all!
United First Financial – Jubilee – MMA – Money Merge Account
United First Financial has developed a web based software system that makes some interesting and intriguing claims:
“Pay off your mortgage in one-half to one-third the time with little or no change to your lifestyle”
It’s a claim that is on the United First Financial (UFF) web site, it’s a claim that the majority of the UFF agents make, it’s impressive, but it’s a lie.
The software program utilizes a Home Equity Line of Credit (HELOC) and tells clients to use it as a checking account. The client is to deposit all paychecks directly into this account and pay all bills out of the account. The software tells the client exactly when to pay a bill, and when to send huge pre-payments towards their mortgage.
UFF claims by using this HELOC account like a checking account you can save tens of thousands of dollars and save years off your mortgage. When following the program, all of the discretionary income filters through the HELOC and goes right to the mortgage. This is not mentioned in the UFF agents “pitch.”
Instead, the agents attribute the savings to the HELOC or Money Merge Account (MMA). Agents claim that by leveraging your paycheck, you can save tens of thousands of dollars and years off your mortgage. What the agents don’t tell you that it is the huge pre-payments to the existing mortgage from the HELOC that creates the savings. Because HELOCS have a higher APR, you have to pay back these huge pre-payments at a higher interest rate (APR) then you normally would if you simply pre-paid the mortgage directly, without the software.
In order for the United First Financial software to work, you would have to drastically change your spending habits. No going to the movies, spending money on designer clothes, going out to dinner, etc. IF THAT IS NOT LIFE CHANGING, I DON’T KNOW WHAT IS!
The HELOC can save you pennies when operated correctly, but would never be enough to justify the software cost ($3500). The reason why the UFF owners created the system around using the money merge account (HELOC) is because it confuses the clients. Not to mention the creators are mortgage brokers who collect commission on new HELOC accounts.
The agents of this product, either deceptively or unknowingly, attribute the savings of interest to the HELOC shuffle (again, this only saves pennies). The ONLY reason people buy the software is because they believe the HELOC is saving them HUNDREDS OF THOUSANDS in interest – this just is not true and I really wish it was, but it is not! The “clients” don’t realize that their extra money is indirectly going to their mortgage. They believe that the software does something that it does not because many of the agents do not know the truth themselves.
In the real world I believe the HELOC would be too tempting to many people and would cause them to get deeper into debt. I have asked agents how this software outperforms other tools that anyone can use for free or for maybe 2% of the cost of UFF, to this day I have no reply.
Agents argue that the software has value because it is a motivational tool, they claim that clients are motivated to get out of debt when they see how much they can save by sending more money towards their mortgage. The agents only make this “motivation” argument AFTER questioned on the validity of their claims about the actual amount of HELOC savings. The “clients” that fall for this scam do not buy the software as a motivational tool, and that is about the only value the software has. Anyone could replicate this motivation by using a free mortgage calculator to figure out how much they save by not buying something, and
instead send that money towards their mortgage.
Using a calculator is easier then logging onto a website and inputting the appropriate field. Calculators are free on the web, and very cheap in many stores.
In several mathematical scenarios United First Financials software comes out behind a free system that people have been using for decades. The do-it-yourself method takes less time than using the software and is easier.
Instead of sending $3500 to United First Financial, simply add up your income, subtract your expenses, and then use the leftover money to pay your mortgage each month.
The major argument that agents use against this do-it-yourself approach is that sending all your additional money to your mortgage leaves you vulnerable in an emergency situation.
This can very easily be avoided by opening a HELOC, independent of UFF and only using it for emergencies.
Agents also claim that people just don’t do it themselves. The make claims that 95% of Americans are drowning in debt and at least their software points them in the right direction.
The problem with that statement is that the software gets them MORE in debt. $3500 for a software program that can be replicated with a free calculator and a sheet of paper is not revolutionary, though the agents also make that claim.
Budget software ranges from free (www.download.com) to $100 for the fancy programs (Microsoft Money, Quicken, etc).
If the UFF software truly did what its agents say, UFF wouldn’t need agents. You would see the UFF software in every retail store across America (Circuit City, Best Buy, Wal-Mart). The problem is that it doesn’t, that’s why UFF uses a Direct Sales approach, retail stores don’t want to ruin their name by selling scam software.
In mathematical scenarios comparing do-it-yourself to UFF, do-it-yourself has always come out ahead, sometimes as much as paying off the mortgage 6 months sooner and saving $20,000 more than UFF.
WHY DO-IT-YOURSELF IS BETTER, EASYER AND CHEAPER THEN UFF:
1. You don’t have to log onto a web site and plug in all your information, taking up to an hour each month. Agents claim that Americans don’t have the time to do-it-themselves. What? Doing it yourself might take 5 minutes a month, much easier then logging on to the website and filling out all the fields.
2. You don’t have to give $3500 to an agent for useless software.
3. UFF agents claim you get life-long support on the software. Do-it-yourself does not require software and only requires a calculator and your bank statement – no support needed.
4. UFF agents will often try to recruit you into their multi-level-marketing company. This can lead to embarrassment when your friends and family find out that it is a scam and that you have been scammed. Do-it-yourself will never scam you or your friends and family!
5. UFF agents claims that Americans can’t do it themselves as effectively. This is another lie, because of the software cost, UFF can’t beat out doing it yourself.
6. UFF agents claim Americans are not smart enough to do it themselves. Again false, to do it yourself you do not even need to know any math as long as you have a calculator! Although simple addition and subtraction is all that is needed to do it yourself. (Income-Expenses=additional payment to mortgage).
Whackashill,
I will offer you the same challenge as Craig. You either prove your self directed money management system is better, in writing than the MMA, or shut up and issue a retraction on this blog.
Its easy to talk smack in a blog when you dont have to back anything up. Read the blog prior to this and let me see what you come up with your financial genius on the scenario I gave Craig with $50 of disposable income. You too can have 30 days, but, as most of you who don’t have anthing to back up your claims, you won’t take the challenge an will make up all kinds of excuses as to why it is not fair or or don’t the time or whatever.
So Whackashill, do you accept my challenge? I doubt it…
PS. Whackshilla, Im not using a HELOC either.
No, you’re using a 2.5% savings account in an attempt to outpace a 6% mortgage.
Anyone can see how futile that would be.
Why even bother to simulate it? I’m in mid-renos at home and at the cottage. I’ve got a spreadsheet forwarded to me that I’ll look at and hopefully just modify soon.
Just to confirm, you’re going to use the savings account as the primary account, correct? Basically, an interest-bearing checking account.
James the Math has already been done. Just look on the link, thousands of posts on the UFF scam. Historically over the past two years, it has been the agents that have refused to do the “challenge” you speak of. They would continue to spout marketing crap with no foundation.
James if your not using a HELOC, why not? The HELOC is what the UFF agents preach as the reason for the great savings. Is UFF changing its system after false claims of hundreds of thousands of interest cancellation?
Whackashill,
No, everyone keeps saying the math has been done. It has not. Everyone wants to show the math that a man with no debts and just a mortgage with a $1000 in disposable income can beat the MMA. If the man had no credit cards of course he would not need the MMA and they would not sell it to him.
You plug THIS in to your math.
6% 30 year loan first payment to be made 1 September, 2008
5 Credit Cards at 11% fixed with balances of $4166 on each one (fixed to make it easy for you), $5000 available credit on each card, and a minimum payment of $120 each
$30,000 brand new car with first payment due 1 Sept on a 5 year note at 6.9%
$2000 in his checking account, but averages $500
$100 in Savings at whatever rate you want to give it.
$6000 Net Income
416.66 in taxes and 60 a month in insurance
After all of his expenses above, plus dry cleaning , gas, and other stuff, he has only $50 a month left over as disposable income.
You tell me what the total payments, principal and interest, he has made on those bills in the 72 month assuming he gets now raises, and when will all of the debt be paid off assuming he accumulates no more debt and everything was static?
Everyone on this board who says the math has been done never does the math on a situation like the one above.
You have 30 days…
Here is a link showing how MMA loses, using their own numbers (blue), vs. doing it yourself (green):
http://spreadsheets.google.com/ccc?key=pszjmlNnSFKhwM90Q3dWHVg&hl=en
MMA loses for 2 reasons:
1) Inefficient HELOC shuffling has you keeping a large balance for an entire month in the HELOC, costing you extra interest.
2) $3500 fee will not be recouped compared to simply doing it yourself.
This is not to say that MMA won’t work as advertised. But you can do better on your own.
Paying anyone to help pay down a mortgage is for the financially undisciplined and mathematically illiterate. If you can’t stick to a budget unless you have a nanny, buy the software. Rich people, busy making money, are used to paying someone for services that they won’t or can’t do themselves. Poor people are too busy wasting time and money to understand why they don’t need to pay for this service.
Craig, I am using the checking account as a checking acount, and a savings account as a savings account. The savings account is just there because you brought it up. ETA on your spreadsheet of this mans situation?
JimmyDaGeek,
In your example, as in everyones example, you are just looking at a mortgage with no other debt, changes in income, changes in finances due to emergency expeditures, etc. Your not comaring apples to apples and as I stated in previous posts, the company would not sell you the software if you dont need it.
With no debt, no credit cards, salaried, no kids, and $1000 of disposable income, anyone can do that and they have always said so. Plug in the scenario I gave Whackhilla above and then be realistic and make the interest rate on the credit cards varible, make them self employed or on bonus or commission and see how complicated it all gets.
I will look at your spread sheet later today. Thank you for posting the link. I need to get to my office…
James,
We have used the SAME example that UFF created to use in presentations to market the UFF product. Agents claim THIS simple example justifies the UFF software. This has clearly been debunked. This example outweighs your example because it has been used by thousands of agents to separate math illiterate people from $3500.
UFF software does not do anything that a normal person can’t do with a calculator, using less time.
It is not difficult to pay off the highest interest card first. UFF now claims that there are millions of ways to pay off ones debt, and they hold they key to figuring out the best way (UFF Scam version 4). What they don’t mention that it is easy to figure out the best way, no software needed. Card A: 10%APR Card B: 15%APR. HMMM WHAT SHOULD I THROW EXTRA MONEY AT??
There is no huge benefit to paying a bill at a certain time of the month, the difference is pennies. Never enough to justify $3500. Example: I pay my Com Ed bill 2 weeks in advance, sure I could have paid it later, making possibly 35 cents in interest on that $150, but it simply was not worth it to me. And paying $3500 software that “shows” you how to do this is ridiculous.
How does this UFF software Version 4 outperform Mirosoft Money or Quicken, both of which cost about 2% of the UFF software?
Again WhackAShill, you fail to perform, throwing out random ideas without showing us how easy it on your spreadsheet as you claim. You never address real world changes in income and expenses life throws at you nor do you say the MMA doesn’t work, just that you think you can do a better job.
Are you going to take the challenge or not? I for one am not afraid to go head to head with anyone using a real world scenario. Dream one up and lets compare the results. Make it really complicated too. Aren’t you willing to play this game?
I gave you the scenario previously in the post. Since it is all static it should be really easy to figure out according to you. Lets see you do it. If your not going to do it, I ask you not to comment until Craig does his spreadsheet for us since he is willing to take the challenge.
And as JimmydaGeek said correctly “Paying anyone to help pay down a mortgage is for the financially undisciplined and mathematically illiterate”. In my 25 years of doing mortgage loans that applies to about 80-90% of my clients. They are finacially undisiplined and mathematically illiterate. They also just don’t have the time to sit down and do a spreadsheet or a budget for that matter (because they are out there trying to make a living) and certainly don’t understand how mortgages and credit cards work.
The MMA, although not perfect nor cheap, is at least an attempt to help these people get control of their spending and see the consequences of their poor spending habits. It is not for everyone but for many it is an awesome tool.
PS. How does it outperform Quicken or MS Money? You can not even compare the software and all it can do with the variety of lifes changes. Have you really seen actual software? My guess is that you have seen the analysis software and not the actual product…
James Barnes
Every situation you described can be easily covered by using a HELOC as a backup to cover any shortfalls. There is nothing magical or mystical about this.
If a family chooses to pay a constant amount to the mortgage each month, then they send it in. If they choose to pay a variable amount, they can simply send in what ever is left in the checking account at the end of the month. If a family comes up short one month, they simply borrow from the HELOC, paying it off FIRST the next month, or over the next few months. During this time, the mortgage is not paid off.
Contrary to what others say, if people want to buy MMA as an expensive motivational tool, budgeting tool, financial dashboard, whatever - that’s their business as long as they understand that MMA will not save people money compared to doing it themselves.
James,
One aspect of MMA I don’t like is that the software encourages clients to pay all debts off from their HELOC, regardless of interest rate, and use MMA to manage the consolidated debt. While this probably helps with credit card debt, this is usually not the case with car loans or similarly collateralized debt.
This also has the effect of creating magic because MMA will use the converted cash flow to convince clients that it has created money out of nowhere. Once the original debt is paid down, this cash flow is hijacked by MMA to pay down the mortgage. This is something anyone can do on their own using the debt snowball payoff method.
As you know, you can not get a HELOC in most states due to the mortgage mess. The MMA can use credit card lines in this new version or even a savings account instead to accomplish the goals, which most people are incapable of doing. Very sad situation indeed… My guess is that you are college educated, but according to the census 73% of the population over 25 are not.
You don’t need a college education to send more money to your mortgage. Most don’t even need a calculator. Under our $500 contingency example, if you have $645 at the end of the month after expenses, add $145 to your mortgage payment, to be applied directly against the principal.
It’s that simple to beat the MMA.
Advising people to use a credit card to pay their mortgage should be criminal. Stashing money in a low interest savings account and waiting to prepay a higher interest mortgage is much safer, but inefficient. For this, you would pay $3500? Want to buy a bridge, too?
I kept a couple grand aside in a savings account as a contingency myself. I never used it, but I slept better knowing I had cash on hand.
James,
I don’t need to see the software “in action” to know its a waste of money. For the same reason I don’t need to try Nazism to know its bull@*#*.
Two years ago one of your UFF agents came to our company, wanting us to push this software on our clients. Within two hours of analysis of the marketing, program, benefits, or lack of benefits, the agent admitted that it was just a motivational tool and that anyone could do it on their own. Why can’t you admit that? Why do you think it can outperform doing it yourself? What proof do you have? Your the one that has to prove the benefit, not the other way around. The math is against you. You start out $3500 behind. There is no shuffle you can do that can save you that much. Debt is not hard to figure out, just pay the highest APR debt first, its simple. No college education needed.
Debt is a reality, but UFF is not the solution. UFF gets you MORE in debt. If you spent the time educating your clients instead of scamming them they would be much better off.
Paying large sums of money towards your mortgage using a high interest credit card is one of the dumbest things I have ever heard. Way to go UFF, now you can use a credit card! What a joke.
I keep reading that MMA will let people use a credit card line - how stupid is that? Anytime I want to take a cash advance, I am hit immediately with a 3% fee with no limit and have to pay 16% a year. I am sure others are hit with much higher interest rates. This is a recipe for disaster. I suppose UFF will recommend that people open credit cards with specific institutions that charge less?