Fri 16 May 08 · Filed under Pyramid Schemes & MLM, Scam Busting
In my book, Dave Ramsey is hands down one of the best and most credible experts on getting out of debt. While I disagree with him on a few technicalities, we’re on the same page for most of what he preaches. The guy talks sense.
So when United First Financial representatives scammers began emailing me, calling me ignorant, stupid, and uneducated because I don’t believe in their product, I decided to research what my beloved Dave Ramsey has to say.
It’s easy to see how people can get sucked into this program. Well-educated and money-savvy people are proclaiming that this is the best thing since sliced bread. “The numbers work,” they say. Well I’m not disputing that the numbers can work if you follow the program.
What I do dispute is the need to spend $3,500 on it. This is a complete waste of money. If you have $3,500 sitting around, use it to pay down some debt now. If you have to use a credit card to pay $3,500 to UFF, then you’re in even bigger trouble as you just added debt to the debt problem you’re trying to solve.
Dave could make it easy for me by having something on his site about UFF. Wouldn’t you know it… the site has an audio clip from a caller asking about the Money Merge Account. Dave is adamantly against the program and the software. He says the fee is a waste of your $3,500.
Dave also points out that UFF’s claim that you can pay off your house in 8 years without changing your lifestyle is a lie. Of course you have to change your lifestyle if you want to apply more money to your debts and pay them off early!
He says that technically the program can work. But that it’s really the change in lifestyle that is needed to pay down the debt. There is no “magic pill” to solve your money problems. It takes hard, consistent work to pay down debt, with or without United First Financial.
Dave Ramsey’s site also says this:
This is basically getting a home equity line of credit and buying some $3,500 software that helps you pay off your mortgage faster with no change in lifestyle. There is no magic software. Software doesn’t enable you to live on less than you make.
That’s up to you. If you make $4,000 a month and want to put $1,000 on your house debt, you have to live on $3,000. You have to change your lifestyle. Does the system work? Yes, so we can’t call it a scam. But you should make a budget and do the work yourself. I hate that they are selling the “magic pill” idea, which doesn’t exist. Do it yourself.
There is also a page on Dave’s site that addresses “mortgage accelerator” programs in general. He hates them. Here’s what he says:
Can You Trust Equity Accelerator Mortgages?
Heard of equity accelerator mortgages that claim to pay off your home in 1/3 of the time?
Don’t buy the hype!
An equity accelerator mortgage is a terrible product! It is simply a variation of an interest-only mortgage. Basically you are getting a long-term, fixed-rate loan but you only pay the interest on the loan for about the first 10 years. Essentially you are renting from the bank for 10 years. This is a disaster waiting to happen because you make ZERO progress on paying your loan down during that time. This can be devastating if you need to sell your home within those first 10 years!
Let me explain. In order to sell a home, you will incur costs such as realtor fees and closing costs. These costs can quickly get into the 5 figure range. If you’ve only been paying interest on your home, you have no equity. That means the $10,000 closing cost comes out of your pocket!
Stay away from equity accelerator mortgages. Get a 15-year fixed-rate loan with a 10 - 20% down payment. Make sure the monthly payments don’t exceed 25% of your take-home pay.
The reason Dave Ramsey hates mortgage accelerator programs is because they create more debt. And because the equity line only requires you to pay interest for the first 10 years, people run the risk of getting into bigger trouble if they aren’t paying toward the principal.
Now I’m sure UFF representatives will say, “Well if they’re not following the program it’s not going to work!” Duh. But here’s the thing… UFF doesn’t make a bad money manager a good money manager. They’re offering you the “chance” to clean up your money management skills and if you do (by following “the program”) you can pay off debts faster.
Do you really need to pay them $3,500 to change your habits when you could do so for free? You get out of debt by changing your lifestyle. You use a home equity line like what UFF promotes to help you pay down your mortgage faster, in theory. But quite simply, there’s a better way to do it. It’s called a regular mortgage and extra payments on principal.
I wanted even more information. Here’s one person’s account of what Dave has said on the radio:
For what it’s worth to you, national radio financial talk show “I’M DEBT FREE!!!!!!!!!!” guy says that this software and program by United First Financial does not sit well with him because while UFF does seem to promote the acceleration of paying down of your mortgage and the software really does do the calculations properly, UFF is also advocating borrowing money (on the HELOC) which pretty much cancels out the good aspect of UFF (if there truly is one). It’s like supporting a smoker to quit smoking then telling it’s OK to just light up and forget about quitting whenever he thinks things are falling apart.(that’s not his analogy, it’s mine. LOL)
Furthermore, he does state that there are some lies in the marketing of their software and program, but to be honest with you, I can’t remember exactly what those where.
He also stated that the software works, but it’s way over-priced and makes no sense for someone to spend money on it since…
1. You don’t need the software to perform the simple calculations it performs.
2. Given #1, why not use that $3500 to pay down your mortgage? That is the whole point of the whole program anyway, right?
From what I gathered from his whole speech about UFF, he’s saying that on the surface the whole thing seems OK and good and well-intentioned, but if you look deep (and not really that deep at all if you have common sense) you will see an ugly MLM sort of set up that works by catering to the “I want everything to be easy” side of the brain of those that are bad with money and making them think that the software program is some sort of magic tool that will, in and of it’s self, cause the mortgage to be paid down just by running the software. This could not be further from the truth because the only thing that will pay down that mortgage is the person and therefore the person has to be disciplined. If the person is bad with money, then what needs to be done is a changing of the person and how they view and work with their finances. And surely, borrowing money through the HELOC certainly isn’t doing anything to promote good financial behavior.
Anyhow, that is the gist of his take on United First Financial. It’s basically a company that takes advantage of people who are bad with money and makes them think there is an “easy way out”. Just like pretty much all of the “make money from home” products sold on TV and Internet and magazine ads.
I very much respect Dave Ramsey and his advice because it’s simple and straight-forward with no fluff. He tells you how it is and how it has to be if you want to be free from the shackles of money and debt.
Take this post and his opinion of UFF for what it’s worth to you. But don’t bash me, I’m just the messenger. LOL
He talked about United First Financial and their Accelerated Equity program for a good 3-5 minutes (or maybe more) and I wish I had been listening online where I could have recorded it so others here could heard it.
Was that an accurate account of what Dave said? Take a look at what Chris Thomas, Dave’s director of national advertising says Dave’s opinion on UFF is:
And for the record, Dave already recommends a mortgage accelerator product: It’s called “write more checks to your mortgage company more frequently.”
Whether you buy into it or not, you have to admit one thing about Dave Ramsey: He’s consistent.
His message of debt freedom has stayed consistent over the last 15 years. It’s this same message that has gotten The Dave Ramsey Show to the level that it is today.
This is why I love it when my phone rings and it’s someone trying to convince me that Dave is the perfect spokesperson for their new consumer debt consolidation service or mortgage accelerator service or any other product that involves taking out a new debt product. If debt is something that Dave has been consistently against for the last 15 years, why do they think he’ll change his mind now?
My phone just rang and I answered it and the conversation started off innocently enough. The lady on the other end (we’ll call her Francis with United First Financial) explained to me that she was interested in advertising her product on our show. My first question to potential advertisers is always “Can you tell me a little bit about your product or service?” I do this for two reasons: First, I find that people like to talk about their product/service, so who better to educate me? Second, if the first sentences out of their mouth include “strip club” or “casino” or “pre-paid legal” then we really shouldn’t waste each other’s time.
Francis happily obliged to answer the question, and within 10 seconds I knew that I was being pitched the mortgage accelorator for the 12th time. When a short break came in the conversation, I politely said to her “Francis, the mortgage accelerator involves a new debt product, right?” She replied with a “Yes.” “Okay, well, Dave is very much against debt, in fact, that’s pretty much what he’s most well-known for and it’s been a fairly significant part of his message for the last 15 years, so it would be inconsistent of him to promote a program that involves a debt product, so for that reason we just can’t do it.”
She couldn’t handle it. She started telling me about her sister or her aunt or someone she knew who had paid off a loan a lot faster with the program and that’s why Dave should recommend it. I again explained the whole “inconsistency issue” and again told her that it just wasn’t something we were going to do. She called me dogmatic. I told her we wouldn’t do it. She called me snooty. I told her we wouldn’t do it. She said this was why she never liked Dave in the first place. I laughed and then told her we wouldn’t do it. I asked her if we could go both go back to work. She said I was accosting her. I told her we wouldn’t do it. She told me she believes these programs are coming from Japan to take over the mortgage industry and that Dave needed to be aware of them and their mighty power. I told her we wouldn’t do it.
Some people just don’t get it.
The message is clear from Dave Ramsey himself and others who have listened to him. He hates the program offered by United First Financial and does not endorse the Money Merge Account. A number of sites are falsely claiming that somehow Dave approves of UFF’s company/product. Some merely implied it because of Dave’s preaching on debt reduction and UFF’s supposed goal to help you do that. Others were much more blatant in their false claims that Dave likes the program.
Dave Ramsey is against United First Financial, the Money Merge Account, and mortgage accelerator programs in general.
I keep getting accused of not doing enough research. Funny. The more research I do, the more adamant I become in the belief that UFF is a horrible company, with a horrible product, and a ridiculous $3,500 fee that could be far better spent by consumers.
You can change your money management skills for free or through a low cost program like Dave Ramsey’s Financial Peace University, or with relatively inexpensive books that will teach you about better financial management.
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It looks like Kiplingers is also uneducated. Link here
BTW Tracy, your blog does not like comments with long URLs in them. That is sort of weird and annoying. That is why I’m TinyURLing even in html.
Can you tell me more about the link problem? It has worked fine for me in Firefix and IE.
I just tried posting the Kiplinger link a few times. It submitted, but the link didn’t appear. I re-submitted and it said it was a duplicate comment. Perhaps is it getting caught by your spam filter? Since I already have my website linked, posting another link would make my comment more spammy.
If you have a blog spam filter perhaps my posts are ending up there.
Yep, definitely a spam problem. And the more you try to submit, the more it confirms to the ‘puter that you’re spam. I’ve unspammed you and all should be well now.
Thanks!
Tickled wrote @ May 18th, 2008 at 8:30 pm
I hereby offer my computer program to tell you which debt to pay off. I am only asking $2,999 and not the $3,500 these guys are selling theirs for (you’ve already saved $501 !)
I claim copyright to the following algorithm:
While more bills:
If this bill has the highest interest rate Then pay off that bill first.
Next bill
Please make checks payable to Obvious Solutions, Inc.
TZIG wrote @ May 19th, 2008 at 3:45 pm
Being in the finance industry for over 12 years I will verify that the math works due mainly to the way interest accrues on a typical closed end mortgage (daily) and the way it accrues on a HELOC (monthly based on average balance). You are in essence leveraging funds. Moreover, you change the amortization schedule of your mortgage (how much of your monthly payment goes toward interest as opposed to principal) as you make additional principal payments using these “leveraged” funds from the HELOC. The way UFF sells it is that the $3500 comes out of the HELOC (not out of pocket) and over X time more than pays for itself. All of this will absolutely work….for the right people and the right situations. If followed and managed properly, you will have paid off your mortgage without running up the HELOC balance.
I was approached about selling this product and felt that I had many clients that would be able to manage this and benefit greatly. The problem is that I don’t feel it is for everyone. The way they are marketing this product is what really turned me off. I initially wanted to refer my clients that could benefit from this software to the UFF “Branch Manager” that approached me for a split of the sale commission. She apparently wasn’t satisfied with that proposal and continued with all the hard sales tactics regardless of my legitimate and well explained objections. In the end I felt it was not worth subjecting even a percentage of my clients to the multi-level marketing sales tactics and all of the stigma that goes with it.
Its a shame because the product is a great tool for some people.
Sorry, TZIG, but the savings have almost nothing to do with the program and HELOC and almost everything to do with the prepayment of principal on the mortgage. That’s not worth $3500. And it’s not worth paying interest on that $3500.
If you do the math correctly, you would see that the program saves you a few hundred dollars a year, and that’s only if you follow it to a T. Even if you do save $200 or $300 a year because of this money shuffle, it’s offset by the cost of the program.
See this article regarding the savings:
http://www.sequence-inc.com/fraudfiles/2008/05/18/the-united-first-financial-system-is-based-on-the-australian-banking-system/
Consumers are better off doing a debt snowball plan which they can do for free. And it’s very easy to understand and apply. And did I mention it’s free? Or that it’s FREE?
TZIG wrote @ May 19th, 2008 at 5:04 pm
Please re-read my post Tracy. I mention the savings through principal reduction. However, do not discredit the savings through the difference in the accrual of interest on a HELOC. Especially in such a general way as the savings would vary significantly depending on the borrower’s specific situation in regards to loan balance, amortization, debt, income…etc. Like I mentioned it’s not for everyone.
However, even with your referrenced savings of $300 per year from the “money shuffle” ….if applied to the principal would knock 20 months off a $200K, 30 year mortgage at 6% and save $14,965.76 in interest. Far more than the $3500….agreed?
That said…..I do not advocate UFF or thier MLM tactics…and will agree that the products value at $3500 is debatable at least.
You almost had me.
Here’s the thing: Saving $300 a year is best case scenario from the money shuffle.
Even assuming you achieved that, you still should not do it. Instead, apply the $3,500 up front to the mortgage. You’ll save over $16,600 in interest by doing that, which is a better deal that what you’re proposing.
TZIG wrote @ May 19th, 2008 at 5:37 pm
How can the savings of $300 per year be best case scenario from the “money shuffle” when each borrower’s specific situation regarding loan balance and remaining term on thier closed end 1st mortgage as well as the average monthly balance on thier HELOC will vary case by case? Remeber, the borrower will be using the HELOC as a checking account paying debts and depositing paychecks/income as they go.
Therefore, the average monthly balance could vary significantly case by case based on the amount of debts and the amount of income of each borrower/customer. The difference between monthly interest on the 1st mortgage and the interest on the monthly average balance of the HELOC couldn’t possibly be maxed out at $300 per year.
In a rush…I may not be explaining this well enough….but I promise to visit again tomorrow. Thanks for entertaining my thoughts.
It’s simple. The money shuffle offers little to no savings. All of the savings are achieved by advance payment of the mortgage.
You are taking a higher interest rate on the line of credit and playing around with it and pretending you’re using a checking account. You are saving a few days to a couple weeks worth of interest on your dormant funds that would have otherwise been idle in your checking account.
How much savings can you possibly realize from that? The experts say it’s a few hundred dollars a year.
If you’re a high earner, you’ll be putting all your excess funds toward the mortgage with this method, but your savings aren’t because of the money shuffle. They’re because you’re prepaying your mortgage.
Tell me you understand this?
UFF brags that this is based of the Australian banking system. Here’s what they say in Australia about it (it sucks):
http://www.sequence-inc.com/fraudfiles/2008/05/18/the-united-first-financial-system-is-based-on-the-australian-banking-system/
“Here’s what they say in Australia about it (it sucks):”
Tracy, that is eloquent as always.
As to TZIG’s 5:04pm comment, you need to do a net present value calculation. You can’t just add up yearly savings for 30 years and compare that to savings in year 1.
Michael - I don’t know if your comment is for me or him or both….
I do these calculations in a spreadsheet, applying the savings when they occur.
So I took $300 a year ($25 a month) extra off the mortgage every month for 30 years for TZIG’s preferred method.
I took the $3,500 extra off the first month for my preferred method.
I ran both all the way out to 360 (or less as the case is for both because of prepayment) and added interest savings for both. Of course, I win because I take off a big chunk up front and immediately start saving interest.
The bottom line is that anyone can save themselves just as much (and probably more) by using their excess cash to prepay their mortgage without a computer telling them the exact day on which to do it.
Like I keep saying… the real savings is not from the shuffle provided by the software. The savings are almost exclusively from the prepayment with excess cash. Period. No software needed. (No expensive HELOC either.)
Oh, yeah, I guess I was unclear. Of course you (Tracy) had done the inverse of the NPV calculation, which is just fine (extra interest from $3500 smaller down payment compared to yearly savings from the thingy).
Most people don’t think about NPV. Another consequence of that is people paying points to pay down their interest rate. That usually doesn’t make sense unless they will keep the house for 10+ years (fairly abnormal nowadays).
TZIG should go back to his finance books. NPV is in one of the first chapters. He was comparing non-comparable numbers.
Yayyyyy!!! We know how I love it when people agree with me. And when they say I’m eloquent. LOL
The other thing UFF doesn’t consider is the cost of getting the HELOC.
Also, I’ve been told that the software limits the comparison that can be made during the demonstration to the potential sucker. I’ve been told that you put in the base amount of your mortgage payment but can’t add on extra payments. Extra payments are only factored into the “see how good UFF is” part of the comparison. And obviously, that side of the example looks far better because you pay more toward the mortgage than the “base” scenario.
Anyone wanna be a guinea pig and go through the analysis w/ an “agent” to tell me if this is indeed the case? If I can verify it I want to write more about it, because I believe that’s deliberately deceptive.
Winston wrote @ May 28th, 2008 at 1:36 pm
It looks like you are starting to understand how the MMA works. True this program is not for everyone. But there are many people that utilize this software and it works wonders for them. A couple variables in everyones calulations that has been left out are; one, that life happens, how do you send extra money to pay down your mortgage if your overbudget for a month or two, simple, people don’t, the MMA takes all the guess work or hours of number crunching out of it for you. Two, Human Nature, this program believe it or not has a tendency to instill thrift in people, by simply following the program you are on the right track, it gives people peace of mind, flexibility, and confidence in their financial futures that they would not realize if not with the MMA.
My thought for Tracy is that you may want to view this product from the general publics eyes not just your own.
On the topic of Dave Ramsey, no doubt he is against the MMA, their are several things that he has been preaching for years and years that the MMA contradicts. To endorse this program he would be going back on what he has preached for so long that has gotten him to where he is today.
Questions for all MMA nay-sayers:
Why did the magazines such as True Wealth, Broker Banker, Personal Real Estate Investor, Mortgage Planner all endorse this product if it has no value?
Why did wells fargo offer a substantial dollar amount for their own private label of the software?
Why are so many, more and more each day, well educated Financial professionals not only endorsing this product but adding it to there business?
I have gone down this road so many times myself, trying to break this program, extensive research and calulations, looking for anything to punch a hole in it. I know you want to hate it, but the truth remains that this company is growing and only begun to change the financial landscape of America.
*sigh*
I’m going to have to start deleting comments from those who haven’t read what I’ve already written on this topic. I’ve been over and over it.
It wouldn’t make sense to view this product “from the general public’s eyes.” I’ve knowledge of finances that some people don’t, and math skills that allow me to determine that this product isn’t worth $3,500.
If you need to spend $3,500 to get some “discipline” in your spending habits, you’ve got bigger problems than anyone can help.
The magazines you’ve listed, as I’ve said several times here, have printed fluff pieces on UFF. There is no substance behind the articles because they were meant for marketing purposes only.
I don’t know about the Wells Fargo deal, so I can’t comment. Even if they did want to “private label” the product, it doesn’t mean it’s worth $3,500 to a consumer.
I’m not saying the program can’t work. I’m saying it’s not worth $3,500 because a consumer can do just as well on their own by using simple math. If they need a little help, there are plenty of inexpensive books on money management that can help them.
Winston, to answer your question:
“Why did the magazines such as True Wealth, Broker Banker, Personal Real Estate Investor, Mortgage Planner all endorse this product if it has no value?”
I would say because those magazines are dumb and the people who write for them are dumb. Why did one WalletPop blogger recommend the product? Because she was dumb.
Here is a better question: Why have Fortune, SmartMoney, Forbes, and Kiplinger’s failed to endorse the MMA and UFF? Because they are less dumb.
Winston wrote @ May 28th, 2008 at 2:14 pm
Michael,
Sorry to hear that so many people are “dumb”. If ingnorance is bliss, you must be one grumpy bugger.
Tracy,
I beg to differ that anyone on their own can match the advantages that the MMA provides in telling the user on how much to borrow(to the penny) and when to borrow it. Do you think the most savy investors out their use only their money to invest, NO that would not be as benificial as using other peoples money. Given a person is as diciplined as a machine to send in extra money each and every month to their 1st mortgage untill it is paid for is just rediculous. Not going to happen….Ever!
I agree that people can pay their mortgage down much faster on their own, just not as fast as with the MMA. Over the coarse of paying the mortgage off the MMA will more then pay for itself. Period.
I’ve already shown on this blog how the silly money shuffle (which is the big selling point for those pushing UFF) will save you a maximum of $15 to $20 a month. You will NEVER recover your investment that way.
The real savings comes with prepayment of one’s mortgage with any excess available cash, and it matters very little if you make that extra payment this week or next week. UFF would have you believe that you need to know THE PRECISE MOMENT to make that payment. You don’t. When you have the cash, pay it on the mortgage. Simple.
But you’ve bought into the smoke and mirrors, and there’s clearly nothing I can say to make you see otherwise. You and many others want to believe in this product. If I’d wasted $3,500 on it, I’d want to think it’s fantastic too.
And I have to tell you that if someone who wants to pay down their mortgage quickly is too dumb to pay extra each month (as you’ve said, that expectation is “rediculous”) then they have problems. Seriously. I have paid extra cash toward my mortgage every single month since I bought my house. It wasn’t hard. I promise.
I’ll second that–it ain’t hard to prepay your mortgage with extra cash. If you can’t figure out how to pay extra money towards your mortgage then you are not responsible enough to own a house. There ain’t nothing wrong with renting.
Winston wrote @ May 28th, 2008 at 2:47 pm
Michael,
That last comment you left clearly classifies you as someone that should not be taken into concideration. Stop now… please.
Tracy,
Again, you are clearly thinking for yourself. Have you looked into how many people know about the Bi-weekly? Compared to how many people really use it? Speaking in terms of the general public, people need this program. I am sure you are very responsible and on top of your money game. I am also convinced that you are extra money to your mortgage. What about the people out there that are responsible with their money and want to pay down their mortgage faster, but don’t want to lose liquidity in there descresionary income every month. Using the Line of credit takes that out as a factor.
I still didn’t seem to get the fact across to you that borrowing small amounts from the line of credit for short periods of time, far out performs your method of save up and send in.
You didn’t get the “fact” across to me because it’s not fact at all.
Under optimal conditions, the method employed by UFF saves a consumer a maximum of $15 to $20 a month.
That will never surpass the $3,500 fee to UFF that could be applied directly to one’s mortgage.
I can’t explain the math any clearer, I’m afraid.
And as far as I’m concerned. Michael’s last comment was exactly on point. You can’t even spell, so I’m thinking maybe we shouldn’t take what you say into consideration?
Winston wrote @ May 28th, 2008 at 3:09 pm
I kan’t spell, it is true. You got me on that won.
Sorry for the typo’s I am doing several things at once.
Under optimal conditions? What are these optimal conditions you are reffering to? Are you aware that the analysis does not take in to count that their are several ways to optimize the software even futher i.e. credit card float, getting your escrows in your own control, paying insurance premiums up front so that you can have greater cash flow through the line of credit, compressing the average monthly balance even lower, thus lowering the effective interest Rate( or interest cost/expense). Did you take all of that into consideration in your ” Optimal Conditions”
Statisically, people are running twenty to twenty five percent ahead of their original analysis. So if a clients payoff is ten years in reality they are looking at around eight, given they figure out how to optimize usage of the software.
Winston,
While you are bashing me for not being worthy of “concideration” (translation: “being near cider”), your whole argument that the MMA and UFF program makes it easier to save and pay down debt is fallacious. The last thing people with debt trouble need is another line of credit. Everything that program offers (except the $15 to $20 per month) is available much cheaper elsewhere.
Budgeting is easy to do with Quicken (or similar free programs, such as Mint.com). One thing that psychological research has shown is most useful in improving saving behavior is to make it automatic. Almost all banks allow for setting up recurring automated payments. By automating mortgage and utility payments it is much easier to stay within a budget and pay down debt. 401(k) plans can be tweaked so that more money is withheld from the paycheck.
So there you go–there is no need for this product (at least not at a price above $100).
Michael - Bless you. You said that far more eloquently than I could.
KM wrote @ June 3rd, 2008 at 11:43 am
I have been looking for a way to speed up the amortization on my conventional 30 yr fixed rate mortgage. I was very intrigued by this program thinking that the HELOC allows for you to speed up the periodic amortization. There is so much conflicting opinion about this, so I finally sat down and ran the numbers myself. I have excellent credit, and the fact is the difference between the fixed rate at say 5.5 and a HELOC is approximately 2%. I did a zero free cash flow model, meaning nothing left over at the end of the month. The fact is that the savings from the lower HELOC average daily balance are met or overwhelmed by the interest rate spread. At best it would be a very minimal savings. As many have said above, there is no doubt the interest rate savings are derived from the cash flow positive nature of any sound budget and the prepayment acceleration which anyone can do by themselves.
My problem is with the way this was is marketed. I sat through the entire 43 minute presentation. They actually claim that the $23k interest rate savings from the $5k prepayment is an apples to apples comparison to the $54 monthly cost of carry on the HELOC. The fact is, they should be comparing the cost of carry on the fixed rate loan with the cost of carry on the HELOC, which is almost identical. Very slick marketing that most uneducated customers would buy hook, line, and sinker. They literally lie and say their “discretionary income” (i.e. money left over at end of the month) numbers are not driving the savings. Aren’t they subject to the Truth in Lending standards that most financial firms are? That is a disgusting misprepresentation. A better product would be a mortgage that amortized on a bi-weekly basis, or weekly basis (as opposed to the standard bi-weekly scams that other firms are running). That is a topic for another day.
Ed wrote @ June 4th, 2008 at 11:02 am
Tracy,
This is a very interesting discussion. You are correct in saying that the product isn’t worth $3,500. You are also correct in that it could provide some small savings each month. A price of less than $500 would probably make some sense. However, there are alot of people who do need help with budgeting and savings, and this program seems to help with some of that.
Thank you for a very useful web-site and discussion blog.
[...] Coenen presents What does Dave Ramsey think about United First Financial » Sequence Inc. Fraud Files by Tracy Coene… posted at [...]
[...] Coenen from The Fraud Files Blog presents What does Dave Ramsey think about United First Financial, and says, “United First Financial pitches their Money Merge Account as the way to pay down [...]
Ok,
If the homeowner does not have $3,500 how can they pay down the principal. Secondly, less than 5% of all homeonwers ever pre-pay on their mortgage, I was told it was actually less than 1% but let’s be conservative. If the Money Merge Account gets the homeowner to follow their program. Then the first 10 years the homeowner pays interest, the interest amount is dramatically reduced. Also, the homeowner is not incurring more debt, when a transfer goes from the line of credit to the 1st mortgage the princiapl balance is still the same. It is just that the 1st mortgage principal has been reduced by the amount the line of credit has been increased. Compared to changing balances on a credit card for a lower rate. Instant feedback tends to modify behavior and homeowners using the MMA will see the benefit on a daily basis and therefore continue to use it to get out of debt. Sometimes when you preach something for so long and a new idea comes along, it is hard for some to embrace new concepts. No explanation needed, we know of many of these times in history this has happened. SO, when less than 1% of Americans prepay the principal on their mortgage and a company comes along that has thousands of homeowners on track to do so, they should be applauded. The impact to the economy will be altered when billions of dollars the banks would have earned interest is in the hands of the American Consumer. DO the math $100,000 per home/1 million homeowner’s (less than 2 % of the homes in America) that’s 100 billion in interest savings.
Like I’ve said… if someone needs to fork over $3,500 in order to get some discipline and prepay their mortgage, they have SERIOUS problems.
Debt and the facts that the banks never want us to be out of debt is the problem.
Americans do have have serious problems. We overspend, live paycheck to paycheck, borrow and spend, spend and borrow. United First offers customer assistance as long as the homeowner needs it and allows the homeowner to transfer the MMA system from mortgage to mortgage or house to house (5 times) with only a nomial $100.00 transfer fee. IF someone uses this system for 20 years the cost is less than $15.00 per month. No one can hire a financial planner or cpa or any type of professional that would give them monthly advice, keep track of their spending habits, give them a REAL TIME pay off date to be mortgage free AND most of all a system that keeps them on track, because budgets don’t work IF they did we would not have the debt problems in America that we have today.
Budgets DO work, it’s just a matter of whether or not people want to follow them. I don’t care if you break it down to a monthly cost over 20 years - $3,500 is TOO MUCH. They can follow my plan for free or they can buy inexpensive software like Quicken which will help them track their spending habits just like this stupid MMA claims to do. They can have a SYSTEM for next to nothing, or they can pay $3,500 for a SYSTEM that does almost the exact same thing (although they probably don’t even understand the money shuffle).
Plain and simple: It’s stupid to pay $3,500 for this.
And actually, it’s not $15 per month. With the time value of money, anyone who uses this stands to lose about $20k in interest payments. If they had applied the $3,500 directly to their mortgage, they would save the $20k. Instead, they give UFF the money and it costs them a whole lot more than $3,500.
Details here:
http://www.sequence-inc.com/fraudfiles/2008/05/16/fun-with-numbers-i-can-save-you-19714-without-united-first-financial/
Joetta wrote @ July 7th, 2008 at 1:23 pm
Let me start by saying that for nearly 8 years I have been a mortgage loan originator. My understanding of budgeting is something I have shared with customers repeatedly, though that was not part of my “job description.” However, once I took a look at the Money Merge Account (which is not a “stupid” program, as inanimate objects have no brain so they cannot be “stupid”) I believed in the product to the point I recommend it to others.
The earlier post where $3,500 would save $20,000 in interest may apply occasionally to some scenarios but won’t apply across the board. So you can’t just throw those figures out without knowing an individual or family’s complete mortgage information.
This program works like an accountability program and helps keep people on trace, 98% after two years. Tell me another program or group that has that type of success rate after two years. I can’t think of one.
This is a once in a lifetime purchase, can be used over and over without a monthly fee.
And, lastly, with no disrespect to Dave Ramsey or others (I purchased Mr. Ramsey’s most recent book) if this program functions as guaranteed (and it’s guaranteed in writing), then there would be no need for Mr. Ramsey, Crown Financial Concepts, or others financial budgeting services. Without spending hours reading, attending seminars/classes, I am able to help people become debt, stay on budget, save $10,000s and even $100,000s in interest. Not only on their mortgage but also on other debts.
This program works! Even if you owe nothing except for your home, it can still help people be mortgage free in 3-6 months faster than without the program. I’d be glad to run an analysis with any individual that wants to see the truth.
Joetta - LOL - You don’t “recommend” the product. YOU’RE SELLING IT! Of course you’re going to tell people it’s fabulous. You want your cut of the $3,500. And who wants to spend “hours” learning about proper financial management when they can just flush $3,500 down the toilet with you, right? I don’t think anyone’s saying that what UFF has doesn’t “work.” It’s just that people needn’t waste $3,500 to get what you’re peddling. There are many cheaper (and even free!) ways of doing it.
Tracy,
Have you ever demo’d the program?
What % of Americans need a debt elimination and wealth accumulation program?
Is our country drowning in consumer debt?
E-mail me if you want a demo>
Since I’ve seen multiple postings by the same person, I thought one more from me wouldn’t hurt.
One lady is right in saying that people have a serious problem if they have trouble budgeting. However, I don’t believe they should have that thrown in their face.
I’ve seen how the Money Merge Account acts like an accountability program and helps people stay on track where they haven’t been able to do so in the past.
Also, I don’t say that the program will have you out of debt in eight years. I do say that most people will be out of debt between 8 and 11 years. When running an analysis, we ask how much does the individual/family have left over at the end of the month. That amount is what the analysis calculates from. If you say you have $300 left over but decide you’re so excited at how this program is working and you “choose” to change your lifestyle to you have an additional hundred or two to add to it, then you do that by choice. Then you’ll be out of debt faster than the original analysis.
After twos years the beta test group, 98% percent of them, were 15-25% ahead of their projection. I believe it was because they saw how well this program worked and decided to reduce their normal spending to reach their goal even faster.
Again, if you haven’t had an analysis run, haven’t seen the true numbers, don’t speak poorly of the program. Lots of people could pay their debts and bet debt free much earlier than they are…but they’re not doing it! If all this program did was to help them stay on task, it’s worth every penny. People that don’t struggle with budgeting have no idea what type of stress this creates for individuals and families. In more than a monitary sense, this program is, again, worth every penny…maybe even more.
Blessings to all…
I’ve seen the demo. Still a waste of money. And the demo is misleading, by the way.
You saw the analysis? or the demo? there is a difference
Have you seen the Businessweek article. Done by Columbia and NYU that mathamatically states the best mortgage to have is an interest only with a HELOC provided the homeowner has a program to run the computations. Columbia, NYU, Wharton, Northwestern, Fordam and others state in a 65 page report with computations included that this is the best way. By the way, where did Dave get his degree. Is it true he filed for bankruptcy multiple times?
Tracy,
Last comment from me. AT $3,500 over 20 years is less than $20.00 per month for a debt elimination tool that requires little or no effirt on the part of the homeowner other than to follow the plan. Do you know of any financial planners, cpa’s, or other professional that will do this for $20 bucks a month for ten to fifteen years?
The real cost is actually $80+ per month when you consider the interest savings of $20,000 that a homeowner could get if they put the $3,500 on their mortgage instead.
And your question avoids the reality that a CPA isn’t required to do what the MMA does. All the consumer has to do is pay an additional sum of money on their mortgage each month. And that’s free.
But you’re not going to admit this is true because you can’t sell this junk if you do. I understand.
Winston wrote @ July 8th, 2008 at 9:42 am
So if this software is a waste of money and what ever else your worthless opinions might be. Why did Ernst & Young give Ufirst an award?
I would you suggest that you and the rest of the nay-sayers start a list of people that you need to appologize to for the miss direction.
This company has a vision to help people out of debt. Let me spell it out for you. THAT IS A GOOD THING!
I assume they gave them an award because they have a clever plan for squeezing the life out of consumers $3,500 at a time.
There’s no “miss direction” here, nor any misdirection. The software is a waste of money, plain and simple. Consumers can get out of debt for free. They don’t have to pay thousands of dollars to a predatory company like UFF.
Winston wrote @ July 8th, 2008 at 10:40 am
To anyone that reads this rhetoric about negative views on the Money Merge Account. I hope that you are capable to have an independent thought an do your homework to find out if this product is for you or not.
Please don’t just take in the opinions of anyone about this product, good or bad. Find an agent in your area and have a free analysis done. And you decide for yourself if this is right for you, with your own mind.
Tracy… shame on you! This world would be a better place without the closed minded people like you. You are either uneducated on the product or you are Ufirst competition. Which is it?
No Winson, shame on YOU. You are peddling a product that is a complete waste of money. I have absolutely no financial interest in this product or any other product like it. I have done independent research on the products and determined that it’s not worth $3,500. And you suggest that people should visit a vulture such as yourself for an “analysis” that will recommend that they buy the product?
But you’ve done the typical thing: Accuse those who see through the sham as “uneducated” or “ignorant.”
My mind was very open. It just so happens that this product is a complete waste of money. And the more people like you stoop to personal insults (rather than actual facts) the more I know I’m exactly on target with my conclusions.
Winston wrote @ July 8th, 2008 at 11:12 am
Hitler was right on target with his conclusions too.
So you are for Debt not against it. If America falls like Rome from the debt accumulated in this country, look no furthure than the mirror for someone to blame.
Good Job.
I seriously hope no one listens to a word you have to say.
You might consider brushing up on your reading comprehension skills a bit. I’ve said that it’s good to pay down debt. We just don’t need UFF to do that.
Further, UFF puts people MORE in debt with their $3,500 fee and the use of a HELOC w/ a higher interest rate than one’s regular mortgage.
Yes, I suppose people should ignore me, who has absolutely nothing to gain one way or another (whether they use UFF or not). And they should listen to you, who wants to earn that $1,000 commission when they pay UFF. That makes a whole lot of sense. Methinks you’re just a bit biased. I have nothing to gain so I tell it like it is.
Fred wrote @ July 9th, 2008 at 2:34 am
Winston,
Tracy just ate your lunch.
Pure and simple.
Moreover, unlike you, she never had to resort to ridiculous analogies to dead German dictators and financial armegeddon.
For the record, I was invited to join a webinar on this topic this evening, but was unable to attend. However, I now see my time spent with my family was aptly prescient as the laughable combinaton of your, Joetta’s, and Mike Strate’s attempts to muster any semblance of reason from such a ploy is fodder for a fool’s errand.
Consider Amway instead.
Tracy, my understanding of these types of pages is for people to share ideas, not to be demeaning or slanderous. You can have your opinions without attaching others. The word “predatory” is a hot button these days and is generally used in reference to lending. I’m not sure what your professional background is or if you’re just a big Dave Ramsey fan, and that’s fine. Like I said, I bought his most recent book. But just like we don’t observe dental practices like we did in the 1850’s, the financial industry isn’t run the same way either. With the technology that is available today even operations are done in a completely different manner.
Dave’s a good guy, has helped a lot of people, but numbers don’t lie. Whether it be the MMA or another device that shows you a larger interest savings, enabling an individual to become a better steward of what they have been blessed with, then go for it.
Continually using the example of $3,500 will reduce your long-term interest by $20,000 is misleading. It may be correct for a few is may be much less or even more. It’s all about the NUMBERS. As humans we are incapable of doing these calculations in our heads.
Yes, paying extra each month will reduce your mortgage. However, we’ve been brainwashed by years of indoctrination that most people will always be paying a mortgage. Enter Dave Ramsey and many others who opened the eyes of many. And that’s wonderful! It has given people hope. And that’s wonderful too! As with a friend of mine (for over 35 years) saw, we took his 27 year mortgage and he’ll now be paid off in less than 5 years. Yes, he makes a lot of money but even though he’s done well with investing, keeping debt low, etc., he never dreamed he could be out of debt in that short of a period of time.
Get out of debt…I’m all for it. But each individual needs to make up their minds as to which way they’d like to travel: via a 1850’s stagecoach or a 2008 jet. Personally, I prefer the jet.
This is my last posting and I won’t be coming back to read your response. Discussion is one thing but you seem to be too emotionally involved to discuss this issue without it becoming personal.
Joetta - The purpose of this site is to discuss things I’m interested in, like what a scam UFF is. It’s not your personal advertising space to push a product that is a waste of money.
It’s funny you mention brainwashing, because it appears UFF “agents” like you have been brainwashed to think that people can’t pay extra on their mortgages without your $3,500 piece of junk. That’s simply not true. Financial discipline does not come from wasting $3,500. It comes from making changes in spending, and that can be done for free or with a very inexpensive book or program from someone like Dave Ramsey.
And you’re right. My $20k figure is misleading. Most people reading this site will actually save more than $20k if they put their $3,500 directly to their mortgage instead of wasting it on UFF. I should really update my figure to reflect the larger figure that is the reality for so many.
There are plenty of inexpensive software packages and spreadsheets that could do the same thing that UFF is doing. Of course, you’ve got to rely on the “secret formula” that no one could possibly do on their own,otherwise you have nothing to peddle.
The truth is that someone could invest lest than $100 in Quicken and do the exact same thing, with less funny money and HELOC drama. All they have to do is figure out how much extra they can pay on their mortgage each month and do it. Then they decide if they want to pay the mortgage down even faster, and re-budget their lives to have more cash available to even more on the mortgage each month. Woo hoo! That advice was FREE!
I have no doubt you’ll be back here.
Heather wrote @ July 11th, 2008 at 8:39 pm
Ha ha ha ha ha ha! Thanks for the FREE advice Tracy. Priceless, no doubt. Oh, and Thank God for Dave Ramsey! I don’t need to spend time sifting through Dave’s “Dirty Laundry…” He tells us all about it. That’s his whole point! Been there, done that, got the T-shirt! If I had $3500 (which would make perfect sense– since I’m GETTING OUT OF DEBT AND HAVE NO EXTRA MONEY), I would certainly not waste it on UFF!
Gimme a break people.
yea winston and joetta…i too am a PROUD United First Financial Agent…you people need to do your due diligence…ever heard of Glenn Beck? He was our speaker recently (same weekend we were awarded the Ernst and Young Entrepreneaur of the Year award!) Mr. Beck’s opinion of our product is a positive one encouraging all 5,000 of us to take UFirst to the American People because our government certainly isn’t doing much about the economy, housing market. etc. i recently was on the air with Dave Ramsey - good ole Dave…too bad he doesn’t understand the program and give us credit where credit is due but we don’t really care!!!!! he is all about selling his “Money Makeover” - go for it! and that’s NOT a pyramid? hum, HE is at the top of his pyramid and every one who buys HIS program HE MAKES MONEY off them…he is ALL about MAKING MONEY with the products that only He, the GREAT DAVE RAMSEY endorses…i have tried to find the blog where i was on his program (just last week) but i hear he called me a “sick lady”…I have been a Realtor for ten years and have sat across closing tables and gasped when i looked at the Truth and Lending Statement (that’s the sheet of paper they usually cover up and tell you not to look at it cause it shows you how much YOU have AGREED to pay back to a lender JUST SO YOU CAN BUY A HOUSE!!! it’s SICKENING! but you do the math…that’s all UFirst is…MATH…2 + 2 DOES equal 4…Dave can’t change that and Dave still isn’t capable of doing what a computer can do…wake up America…if you don’t know how the Money Merge Account works, check it out yourself…don’t take HIS word for it…
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