(Merry Christmas. I’ve been good – can I have a Bentley now?)

Another option is Excel, some cool examples of which are at vertex42 dot com. Look under Extra Payments. You could charge clients $350/year to manage the process and they’d be ahead by a few years and a few hundred bucks over MMA. Just sayin’.

Congrats on the SAT, if that’s the case. Usually those who do that have a certain personality, a bit more black and white, and a bit too logical, almost to a fault. We usually don’t fall for nonsense like this.

By the way, the user with all the other debt should focus on paying that debt off, highest rate first. It makes little sense to throw $3500 to this software when the algorithm is so simple. “Pay all account’s minimums, and send any extra funds to the highest interest rate debt.”

You do get points for your paragraphs, though. We find many agents going off on incoherent rants with no structure. Your points are well presented, even though I dispute the validity of each and every one.

I’ll pass on the video. Why not read my 60 page PDF of all my own posts, and come back with numbers. An example of when MMA actually is better.

I’ve NOT read all 801 comments here, but I have read several of yours.

I too aced the Math SATs in high school, for what ever that is worth.

I’ve done a ton of investigation on this MMA thing and built an Amortization Table with the ability to add additional money to the monthly mortgage payment to see how it would compare.

You are right, IF, and this is a HUGE/BIG if, you pay $200 additionally each and every month for 21.1 years, you will beat the MMA, which including the $3,500 fee, comes out at 21.4 years. If you miss on average one $200 extra payment per year, its dead even, so probably throw Christmas gifts out each year and use the $200 for your mortgage – NOT!

So if you have THAT kind of discipline, have at it, but we all know that * LIFE * gets in the way, the car breaks down, a kid gets sick, the A/C goes out, etc. and you DON’T make that extra $200 for a month, then the feeling is that next month to catch up you REALLY should do $400 that you DON’T have so you don’t do it then either, and just like going to the gym every day, then miss a day, then well I missed yesterday I’ll start back next week, and before you know it, you’ve NOT been back at all. Same thing happens with the “I’ll pay $200 extra a month” scenario and over 98% of those who start that discipline abandon it wihtin the first year.

With the MMA system, at least it will get you back on track, unless you fully abandon the software as well, in which case, its not the software’s fault, it was trying and recalculating to keep you on track.

Even though the $200 scenario shows it beating the MMA, I’ve run dozens of scenarios where it DIDN’T, and if you add in other debts such as auto loans and a couple credit cards, it DOES almost become impossible for you to figure out how much and when additional amounts should go to each debt. And who JUST has a mortgage these days without ANY other debt as well? Almost nobody.

One last thing, the “I’ll pay an extra $200 a month” plan does not leave you liquid, it uses most available cash to do so, and in the case of an emergency, you can’t just go back to the bank and say, “I’ve paid an extra $2,400 last year and could use it, would you kindly give it back?” They’d say, sure, just take out another loan, which just increased your monthly expenses and your debt load.

Feel free to watch my video series at
NeverRefi dot com / stnick

What happened to that $8500 loan? Did MMA tell you to write a check from the HELOC to pay it off? What is its interest rate and monthly payment?

One of the tricks that MMA uses is to pay off any outstanding debt you have using the HELOC and “steal” that monthly payment to pay off your mortgage. You magically have extra money to pay down your mortgage while the HELOC balance isn’t paid off as fast as it ought to be.

You were told this, but it isn’t true. When your HELOC rate is lower than your mortgage rate, the optimal amount is “as much as possible”, though as Joe correctly pointed out, the bigger the number, the bigger the risk. When it is more than your mortgage rate, it’s equal to your monthly income the first month, and your discretionary income after that. That’s it. The funny thing is the MMA software doesn’t ever seem to use the optimal amounts.

If Joe is right in estimating your savings at $300/yr, that means you have a minimum of 12 years until you’ve paid for the software with your savings, and that ignores the interest on the additional $3500, which you carry until the mortgage is paid off….probably adding another few years to your break even date. 12 years for principal, plus another few for added interest, for many users, the break even never happens because you would pay off the house before breaking even with what you could have done easily on your own.

As Joe said, you like it, so be happy with what you don’t know. Just please don’t recommend putting others into the same system when just a minimal amount of information will give them a free and better alternative. Handing over your finances to a black box is not a good thing.

calvin

All I’d suggest to you now is that if you have an employer who offers any match on your 401(k), take it, don’t miss a dime of match to prepay a mortgage. And don’t pay a dime of high interest credit card debt to pay the mortgage. I wish you well, I hope your knees still work.

My mission is to talk to people before the sale. My message is simple, “at the end of each month, send your extra money to the mortgage, marked as principal.” repeat.
It’s far more than 95%, I’m the guy who aced the Math SATs in high school. I didn’t play football, but got an A in gym as I tutored the players to keep their grades high enough to keep playing.
But – there’s no math to do this, well, maybe just adding that bit to the check, but anyone can add with a calculator, right? MMA agents are trained to convince you that the math is beyond you. My secret? There is no math.

All well and good, but all the savings don’t add to enough to fund the MMA fee of $3500. I’ve done the math many times and proven MMA cannot beat DIY. Ever.

The math is very straightforward. The MMA cannot be doing what you are saying it’s doing. You either have more discretionary income than you think, or you are looking at the results incorrectly. I am more than happy to show you where your discrepency is, but it would mean putting some numbers out there (income, expenses, etc). If you only have $75 extra a month, the most the MMA can send to your mortgage is $75 a month plus a few dollars in interest, while the extra $3500 in debt generates and extra $10-$20 in interest alone, not to mention the extra principal owed.

I’m not trying to call you out or call you a liar, I’m just saying the math is saying your numbers can’t be right. Something is different from what you think it is. The most common one is bi-weekly income. If you are paid every two weeks, and you have $75 left over each month *that you get two paychecks*, then you have substantially more income since you have two paychecks unaccounted for in your $75/month. Just one thing it could be. We have run literally hundreds of simulations of this process. We know exactly what it’s doing. It never wins with the $3500 anchor, and rarely wins without it.

Calvin