One of the most common forms of “training” offered to members of multi-level marketing companies (also known as direct sales, pyramid schemes, dual marketing, networking marketing, etc) is Overcoming Objections. Why is that such a key? Because all of the ones that I’ve seen have overpriced, underperforming products, and consumers are usually pretty quick to see that.
So distributors, agents, representatives, or whatever they’re called must be skilling in overcoming every single objection you could have. In Mary Kay, consultants are trained: “No does not mean no. It means that she needs more information.” Clearly, the only answer that is accepted is “yes.”
United First Financial trains its “agents” in the fine art of overcoming objections, and today I’m going to share with you a couple of them.
The software costs too much. $3,500 is a lot of money.
(Those who say this are exactly right. Consumers could do for free what this software does, even though they want you to believe it’s magic math that helps you pay off your mortgage. It’s not magic math. It’s simply payment of your mortgage above and beyond your regular monthly payment.)
The script:
First of all, people are realizing tens, and even hundreds of thousands of dollars in savings by utilizing the MMA program. Even if they are able to save as little as $35,000, that is a 1000% return on their initial investment in the form of interest savings. If your customer were to save $350,000, that is a 10,000% return on investment, in the form of interest savings. Realizing that type of savings over a twelve year term is an 833% annual return, again in the form of interest savings. To top it off, the program is guaranteed as long as your customer’s monthly income and expenses stay within the guidelines of the initial Money Merge Analysis.
In our experience, the average client realizes over $3,500 in future interest savings by using the MMA program in a matter of 3-5 months. This means that your customer will most likely realize an interest savings that was greater than the $3500 original investment.
It is very important to point out that the $3500 is not paid out of the client’s checking account, but is usually paid directly from the HELOC. In other words, the bank is lending them the money for the MMA program. This payment should not result in any change to your customer’s current lifestyle in any way. This is not unlike rolling the cost of refinancing a mortgage into the loan with the exception that with the MMA, we are not incurring additional long term debt, but showing your customer how to become debt free in one third to one half the time.
This is probably a good time that I can save you $20,000 in interest without you paying me a cent. Even more can be saved (for free!) by simply paying extra money toward your mortgage each month. These figures in the script sound impressive, but they’re simply window dressing. This program does nothing that a consumer can’t do without it.
I can do this myself.
(Of course you can. I’ve been telling readers this all along. The program doesn’t save you money. Simple prepayment of your mortgage does. You don’t need to waste $3,500 to pay off your mortgage early.)
The script:
You might if you were programmed and conditioned to calculate the exact amount of money to be transferred to your primary mortgage each and every month. The MMA program is set up so that the maximum amount of funds are sent to principal, while the least amount is paid in interest. The MMA is a finely tuned system that is maximizing the power of your money. There is much more involved than just taking your discretionary income and applying it to your first mortgage each month. Using the MMA Program will accelerate the payoff much faster than a monthly transfer to principal. Please do not underestimate the power of the program.
Also included in the system is a real time “Financial Dashboard” that continually gives you feedback every time you make an entry into the software. This allows you to make better decisions when it comes to capital expenditures and planning for a better future.
In a nutshell, the MMA program helps your customer develop better spending habits. For example, ask them if they are where they want to be financially. If not, why? It is most likely because they are not conditioned or programmed to send extra money to their mortgage company. They need the MMA. The majority of clients who have been on the MMA program for over two years are still on the program, and in most cases are ahead of their projected schedule. The MMA program does in fact help people change the way they look at becoming debt free in a positive and rewarding way.
The MMA not only offers our customers an interest cancellation program, but generally offers them a reserve of funds that can be accessed in case of an emergency.
Of course the powers that be must tell you that there’s fancy math involved here. You wouldn’t pay $3,500 if you didn’t think it was fancy. So the United First Financial people direct you to do a money shuffle each month that saves you a few dollars… .literally. The real savings is from the prepayment, not this “optimal timing” nonsense.
But don’t take my word for it. Professor Jack Guttentag (very smart man) has determined that you’ll save a couple of hundred dollars a year with the money shuffle. The real savings comes from…. drum roll…. the simple prepayment of the mortgage. In Australia, lawmakers have determined that these debt reduction programs are essentially sold based on a bunch of lies.
27 Aug 08 at 1:19 pm
Tracy…
Seems like so much of what the other MLMs try to sell onto their people is just as unnecessary for the most part as this debt killing software which that is designed more to kills a person budget to buying it in the first place. Books, tapes, and other mostly useless information pushed on MLM distributors is absolutely “optional” and the box in front of Standing Order Tape should not be checked people. Neither should the contract.
How simple, just pay extra money toward your mortgage every month. Seems like a simple thing to do made extremely complex in expensive soft(con)ware shorting the victim out of 35 Franklins. But of course, resistance is futile! Smile
29 Aug 08 at 1:27 pm
What is truly remarkable though is this: There are countless blogs with thousands of posts on MMA. No agent can discuss it only with numbers. They go off on tangents, anedotes, and Horatio Alger stories.
When I prove the numbers just don’t work, they fall back to “but how many people actually do this on their own?”
So $3500 is the right amount to extract from someone who needs promting to send all their money to their mortgage? They then take credit for the magic the program provides. The HELOC use savings isn’t even enough to cover the cost of the program. Remarkable the state’s attorneys general haven’t cracked down on this.
Joe
29 Aug 08 at 3:58 pm
The Jubilee Project has an even better reason why you can’t do this on your own: Version 4 of the MMA comes with Factorial Math:
http://forumidiot.wordpress.com/2008/07/02/the-money-merge-account-evolution/
Read the comments in that blog for a good laugh. I had a lot of fun writing that one.
Combinatorics - one more area of mathematics not understood by UFF agents.
29 Aug 08 at 4:22 pm
What V4.0 also does is suggest that one charge everything on a credit card, use the month’s cash to pay toward the mortgage, and use the next month’s income to pay the card. Makes sense, but it’s also one more way for MMA to take credit for a chunk of change that was always there.
Joe
03 Sep 08 at 7:37 am
Kudos Tracy !
As a forensic accountant who investigates financial crimes (like the mma SCAM) consumers should heed your words!
It’s all “Smoke and Mirrors” http://www.theage.com.au/news/property/smoke-and-mirrors/2004/09/28/1096137225560.html
The MMA is sold based on nothig but Lies and Deception. Consumers should ask themselves why the swindlers who peddal this mma crap aren’t being honest? … as with all financial crimes the motivation is nothing but ignorance and greed at heart!
15 Sep 08 at 11:11 pm
Open challenge to all promoters of the money merge account concept. Show me the math!
16 Sep 08 at 5:40 am
Carl…
Resistance is futile! LMAO
16 Sep 08 at 6:30 am
Wild Wild West - UFF agents don’t know the math. Most don’t seem to know mortgage math, never mind the useless algorithm touted by the MMA. They won’t show us the money movements of the MMA in great detail, either, as I’m sure it would be pretty easy to deconstruct what the MMA does with a few lines of computer code. The irony is, you could write a more efficient mortgage acceleration program with fewer lines of code and ignore the HELOC or CC option altogether.
16 Sep 08 at 10:17 am
WWW - it won’t happen. Once you dig into the math, you realize that the true return from the HELOC shuffle simply cannot exceed the cost of the program. What they rely on is the confusion due to compound interest and time value of money.
I plug in $5000 as a first month prepayment, and see that I’ve saved $23304 in future interest. This is real, simply the future value of $5000 over 30 yrs at 6%. But the agents promote how you’ve magically saved $23K in the first month of your MMA program, and all you paid them was $3500! Then, when you pay every last cent of your extra income to the HELOC over the next 8 months to pay the total of $5000 plus the $3500 cost, they downplay the fact that it was your own money doing this, not the HELOC shuffle. They will even show how $8500 borrowed at 8%/yr, but for an average balance of about half that will cost you only $227 or so in interest! Wow! Look at that! They just saved you $23K, and after 8 months you only paid $227 in interest to save that huge sum. “You simply cannot do this on your own!”
In the end, it takes “sophisticated algorithms”, “factorial math” , and “Eye of newt and toe of frog, wool of bat and tongue of dog” *** to confuse any prospective buyer who already has little idea how a mortgage works.
To be fair, I’ve had recent dialog with a number of agents, two of whom do not hype the HELOC savings, but offer the product as an organising tool to change one’s behavior. If you maintain a zero checking balance and every expense is shown to cost you 6X that amount at the back end (e.g. a $500 gas grill purchase when plugged into my spreadsheet would save $3,000 of the end of the mortgage). While I maintain that I can still do this on my own, one kind agent said I was atypical, many don’t have the knowledge or inclination, they need more handholding. For them, I view the $3500 as an idiot tax, and concede that for those so ignorant, they may be better off with the program than without. This is as far as I’ll ever go to offer any positive remarks regarding MMA. 98% of agents continue with the hyperbole and cllaims that are simply false.
*** (sorry, there’s actually no eye of newt involved, my bad)
JOE
24 Sep 08 at 10:26 am
Can someone tell me why Ernst Young gave that company the Entrepreneur of year award? I think they know how money works or maybe they dont, if it helps you fine if not fine. The bottom line the people using it are better off than they were. Remember time value of money .
24 Sep 08 at 10:29 am
Ernst & Young did not give them an award. E&Y sponsored an award series. The awards are given out for a good business plan, i.e. The owners are going to get rich. Of course, they’re getting rich at the expense of suckers who fork over $3,500, not realizing they could do better on their own for free. (Time value of money: Throwing $3,500 down the toilet today when you could apply it to your mortgage now and save about $20k of interest… now that’s time value!) This “award” is no endorsement of what they’re selling. Just like none of the awards received by Enron considered the fact that the company may have been a total fraud.
24 Sep 08 at 8:54 pm
Tracy have you discovered fraud in the case of the MMA? I’d be curious to know. If so I will tell all my friends and family.
24 Sep 08 at 8:57 pm
I’ve discovered two things relative to UFF/MMA:
1. It is not worth $3,500. Consumers can do a better job, spend less time, and save more money WITHOUT the MMA. The do-it-yourself plan provides better results for free.
2. There is little chance of anyone getting their money back under the UFF “money back guarantee”:
http://www.sequence-inc.com/fraudfiles/2008/09/10/the-united-first-financial-limited-guarantee/
3. I’ve discovered deception in the promotional materials:
http://www.sequence-inc.com/fraudfiles/2008/09/05/united-first-financial-sell-them-with-deceit/
http://www.sequence-inc.com/fraudfiles/2008/08/20/united-first-financial-lies-you-can-pay-off-your-mortgage-faster-with-no-change-in-spending/
24 Sep 08 at 9:08 pm
Are you a liberal democrat?
24 Sep 08 at 9:26 pm
lol
You haven’t read much else on this site, have you?
24 Sep 08 at 9:30 pm
Yea…wasn’t sure about that one…seems like it though…I’m an independent so I’m the nicest guy you’ll find.
24 Sep 08 at 9:40 pm
What the hell do Tracy’s political leanings have to do with UFF? It’s a bad deal for Democrats, Republicans, Libertarians, Scientologists, Horticulturalists and Astronauts. Everyone should be offended by this product and its marketing.
Actually, Scientologists should buy it. And release Katie Holmes.
24 Sep 08 at 9:46 pm
What would you do if you found 1,000,000?
25 Sep 08 at 7:36 am
Spend my life asking people useless hypothetical questions.
25 Sep 08 at 7:41 am
Chris, “liberal democrat”? Have you read anything else on her blog, or are you just joking around? Tracy makes Ayn Rand look like a commie and is ever further to the right than I am,
25 Sep 08 at 8:25 am
Careful, Lee. He’ll ask you what you’d do with $1,000,000 next.
25 Sep 08 at 8:37 am
Chris, if you can’t be bothered to read anything else on this site, I can’t be bothered to answer you. It’s clear as day if you take just a few seconds which way I lean politically.
25 Sep 08 at 10:54 am
the reason it seemed to make sense to me was that the HELOC was available as a safety net. It is hard to make these changes on my own and I am not disiplned enough to put all my extra earnings into a high interest savings and not touch it, nor can I put all my extra earnings toward my mortgage and have nothing to fall back on. While I could just have HELOC for a safety net while I do one of the two things, my behavior did not change and bills (in addition to mortgage) were not being paid down… this gives me a guideline to stick with.
25 Sep 08 at 10:59 am
Nik - If you qualify for a Heloc, you qualify. That means you could get one on your own without paying $3,500 to UFF in addition to the Heloc fees. The Heloc itself does not get you any further ahead financially, but if you want it as a “safety net” you can do that without wasting money on this software.
And again, you don’t need to pay $3,500 for a “guideline” as you call it. If you want budget help, $99 software will do it for you and then you’ll have your guideline.
25 Sep 08 at 11:38 am
NIK, the big danger is that as the credit market contracts, you run the risk of having your HELOC reduced or cut off by the bank. It’s already happening. If that happens to a UFF MMA user who has been washing their monthly expenses through the HELOC then there is a very precise term financial planners use for the situation you end up in: “fucked.”
Additionally, anyone who has problems with budgeting and impulsive spending would be better served seeing a counsellor at a non-profit debtor consulting agency in their area.
25 Sep 08 at 7:55 pm
I think that you all are WAY to critical of a solution that will HELP so many people. Can’t you see that the majority of people CAN NOT do this on thier own?!
Why can’t you see that….just look at our economy and where people are financially! It doesn’t make sense that you are fighting this!
25 Sep 08 at 7:58 pm
Of course it makes sense. This is not worth $3,500 and people who are bad money managers before wasting $3,500 will be bad money managers after wasting $3,500. Anyone who isn’t capable of doing the math to see how much money they have left over at the end of the month, and then sending that money to the mortgage company ought not have a mortgage to begin with.
“This” is simply paying more each month on their mortgage. I suspect anyone with a brain CAN do this “on their own.”
I realize that UFF “agents” have to exclaim that this is necessary and people can’t possibly pay off their mortgages without the software. But that’s a lie.
25 Sep 08 at 8:16 pm
Tracy…
Today on CNN they had some of the bank employees interviewed that said the bank operated boiler room operations to push these sub prime loans on people who didn’t really need or want them. Seems like this $3,500 dollar con on people is no different than these bankers operating boiler rooms. Obviously there must be people who find out the truth that they have been taken for the full amount of 3.5 g’s by visiting this page. Denial is not only a river flowing past the pyramid schemes.
25 Sep 08 at 8:55 pm
I love it when UFF “agents” claim they have something like a 97% retention rate!!!
Ha! Retention rates are typically used relative to services that you have to pay for on a periodic basis (like your auto insurance which you renew every six months or every year).
Retention for UFF? Of course! Once you’ve wasted your $3,500, you’re probably not going to quit using the product! But that’s not really “retention”, is it?
25 Sep 08 at 9:07 pm
So, upon finding out the real deal, cognitive dissonance takes place.
For those unfamiliar with what this is and who also may be experiencing it, here is the opening lines from Wiki:
In psychology, cognitive dissonance is an uncomfortable feeling or stress caused by holding two contradictory ideas simultaneously. The theory of cognitive dissonance proposes that people have a fundamental cognitive drive to reduce this dissonance by modifying an existing belief, or rejecting one of the contradictory ideas.
Often one of the ideas is a fundamental element of ego, like “I am a good person” or “I made the right decision.” This can result in rationalization when a person is presented with evidence of a bad choice, or in other cases. Prevention of cognitive dissonance may also contribute to confirmation bias or denial of discomforting evidence.
28 Sep 08 at 7:06 pm
Tracy in reading your posts over the past it is very clear you have not done your research,if you have please explain it to everyone.I have been using the software since march and it may be be the 3500.00 that i ever spent.Before i was on the software i paid my mortgage every month just like everyone else no extra, i knew i could pay extra but i did not. Having said that could you do this on your own YES could you get the same result NO there would be to much time and effort involed. If they shut the company down today i would be right back to square one,call me lazy or whatever. The fact of the matter is i’m doing somthing i would not have done without this service. I am not bashisg you in any way,is it for everyone maybe not. I could ride a bike to work and save on gas but i take my car why it’s more efficient same w/the software. It’s a much better use of the time value of money.
28 Sep 08 at 7:51 pm
Bruce - You spend far more time using this software and doing the silly money shuffle than you would if you simply made one extra payment to your mortgage each month. (Or even easier, just pay extra with your regular payment, which would take you NO time.)
Seriously, the fact that someone won’t make that tiny effort until after they’ve wasted $3,500 on UFF says a lot about the person. And none of it is good.
The software is in no way more efficient. It is far more cumbersome and time consuming, and you save far less money than you could without it.
29 Sep 08 at 6:23 pm
Please explain the software tracy just w/mortage and then with 5 others debts with different terms, adjusting rates,lenght of loan .Btw how about that stock market just think how lucky the people are that own the software they are safe from that mess with 0 risk,uff has changed so many lives for the better it just makes you want to smile from ear to ear. Please explain the software.
29 Sep 08 at 6:59 pm
Ooh Bruce. Now this is gonna be tough. You ready?
All extra cash each month is paid to the debt that has the highest interest rate. When that’s paid off, use extra cash each month to pay the one with the next highest rate. (Warning : This requires you to look at your statement once a month.)
If you want to be really cool, draw off the Heloc and use the money to pay off any debt with a higher interest rate. Only do this if there is at least a 2 or 3 percentage difference between the rates.
All this advice FOR FREE.
29 Sep 08 at 10:08 pm
As expected, Bruce has informed me via email that I AM WRONG. LOL.
He doesn’t know how or why, but UFF told him it’s so. My way is wrong. UFF does it better using something called factorial math. But he doesn’t know how that works. I’m just wrong. So there.
Sorry, Bruce. But what you asked of me only requires the simplest of mathematical calculations, which I did for you. That’s why I think UFF is akin to snake oil… They get uninformed people like you to believe there’s some magic behind it. I don’t know how they convinced you, but I do know that no amount of facts and math will make you believe I’m right.
Which is why this company is so dangerous. UFF agents are conning people out of $3,500 one at a time based upon some bogus claims about factorial math. Sad.
29 Sep 08 at 10:58 pm
Tracy…
Maybe it is time to close down comments on this string. RESISTANCE IS FUTILE! BWAHAHAHAHAHAHHAHA
30 Sep 08 at 10:21 am
Ah! The Factorial math! And the claims that “you can’t do this on your own!” “Factorial” if anyone recalls their high school math is simply N!=N*(N-1)*(N-2)….*1. Ok, Joe, slow down. How about 3!=3*2*1 = 6 ?
If you are making a ham and cheese sandwich w/ tomato there are this many ways to order the items in the sandwich. A choice of one of the three to put down first, then a choice of two, then the last item, so 3*2*1 or 6 ways to make that sandwich. Now, if you had 5 ingredients, the numbers jumps to 120 choices, but logic and personal preference keep us from pondering each of these permutations separately, and across the country every morning, sandwiches are created without much anxiety and surely without software sifting through the math for you.
In a similar vein, we had a very small wedding, 25 people. 25! results in a number that starts with a 1 and has 25 more digits, (1.5*10^25 for the geeks out there) and yet, my wife and I spent no more than a hour to arrange the seating.
To Tracy’s point, when one has multiple debts, the analysis involved is less than minimal, it’s trivial. But MMA needed to find more hyperbole to somehow attribute value to a system that simply has none. When you list your debts, which you need to do anyway for MMA, it will take you less time to observe which number is highest, i.e. the debt with the largest rate, to pay back first. Of course (to repeat Tracy’s point) if you set up a HELOC, you can use that to knock off a number of the high debt accounts down to the HELOC rate. Using this process, you’d not touch the mortgage until all other (higher interest) debt is retired.
If none of this convinces anyone, then ask yourself this; do most of the agents even understand what “factorial math” is? I do, I just explained it to you. I’ve had no few than 6 agents thank me for the explanation, as they now understand their own claims a bit better, and they realize that this one feature is a non-issue. Only those who have no idea what it means cling to the “can’t do it yourself” claims.
Joe
30 Sep 08 at 10:36 am
It’s startling and disturbing how many people in our society are completely innumerate. It also goes a long way to explain how so many people got roped into mortgages whose terms totally took them by surprise when their rates reset.
30 Sep 08 at 11:37 am
Lee…
It was reported on 60 Minutes that companies holding these bad debts hired technical writers to try to hide these embarrassments in a cloud of technical jargon. People facing the fine print of sub prime loans were exposed to similar situations I am sure. In the “take it or leave it” world of obtaining a loan, might we surmise that even though it is a buyer beware world, the loaner seems to hold the stacked deck.
It amazes me how people rationalize things like this money merge deal after making bad decisions to buy it once the real facts of the matter are out on the table for all to see. The same thing applies to the 100s of thousands of people who get involved in MLM sham businesses each and every year.
JoeTaxpayer, thanks for producing another smoking gun on this bad deal. Resistance is futile. Tracy, What a classic!
30 Sep 08 at 12:24 pm
What I can’t comprehend is that the single largest purchase of a person’s life (a home) is entered into without a competent understanding of the terms of the mortgage.
01 Oct 08 at 7:25 pm
Floks uff is only going one way UP, Why so bitter because you can do it on your own. If this helps people whats wrong w/ that. Why do people have accountants because they feel they can do a better job and it’s easy to hire someone else to do it, could you do it on your own YES would the result be the same maybe maybe not. Do the agents make alot of money yes but the clients are smiling all the way to financial freedom. Btw does tiger woods have a golf coach . I think we all agree he does not need a coach, then why does he have one the answer is he wants to get most out of his game.I am willing to bet he is paying big bucks for his coach. But why?????????????? He could do this on his own.
01 Oct 08 at 9:59 pm
Bruce, if you haven’t bothered to read any of the positions against UFF by now, you deserve to get taken.
For those who do read, beating the MMA is ridiculously simple - just send all extra income to the mortgage each month. That’s it. Any comparisons to Tiger Woods are null and void because Tiger is efficient and looking for slight edges and improvements, and the MMA is inefficient and can’t beat the simplest of game plans as outlined above.
02 Oct 08 at 1:51 am
Tracy was so right when she said “Resistance is Futile!”
People falling prey to these con jobs many times develop “cognitive dissonance” which may or may not resolve the conflict of information. This explains why many people can hold onto erroneous belief in the face of overwhelming evidence to the contrary. People selling enthusiasm for MLM businesses–for example–use what ever psychological means to encourage a person to believe their opportunity is legitimate and to disregard any evidence to the contrary. Terms like “Fake It Until You Make It” and “The truth doesn’t matter when success is involved” or any number of similar ideas espoused by dream weavers which adherents pay good money for. They are sold on the con continuously.
Who, after all, wants to admit that they have been snookered out of 35 Franklins?
02 Oct 08 at 6:25 pm
I have heard a lot of stuff on this, mostly bashing UFF. Only real thing you guys and girls are saying is. You can do it yourself, make extra payments. Well if is is so simple, why is every american in more debt than they can pay for? Why doesn’t everybody just take your advice and do just what you say, make extra payments? Answer that smarty. MMA is a money management tool it does so much more than just pay off debt. I could see if any of you accually bought the software and used it, then saw that it wasn’t worth it. But you haven’t done that, have you? You are just on the outside looking in. And why don’t you ask the countries who have been using these same concepts that MMA uses for years. (Australia,the UK, New Zealand) See why they have been paying off there mortgages way faster. Any way evey company and every product has negative people that have something to say. NAME ME ONE THAT DOESN’T. All the way from Microsolf, down to the small time insurance company in the middle of now were. If is works, it works! And to all the non-believers good luck paying off all your debts!
02 Oct 08 at 9:29 pm
No one would want to admit it! But, I can totally see how, if you are mathematically illiterate, (like me) you could fall into it… and it having nothing to do with commitment to work hard, save, budget, and give generously. I am a flower child. Literally. I am a couture florist…very artistic, nonfunctional with money let alone numbers. I wish it was different. I am currently taking courses to improve. In spite of my honest efforts, and advise asking…I am currently being sold to…have not yet bitten. You guys are freaking me out, in a good way. I think you might have just saved me alot of money. The ideas they present prey on my fear and true suckiness with the numbers. UFirst seemed like having my own personal accountant that will help me do all this the best, fastest, smartest way, since I couldn’t do what they do on my own.
02 Oct 08 at 9:41 pm
LOL Jermaine - Like I’ve said here before… Anyone who has to flush $3,500 down the toilet before finding themselves capable of sending extra money to their mortgage company (which is all UFF has you do, except with several unnecessary steps in between)… Well, they deserve to be taken!
02 Oct 08 at 9:43 pm
Rachel - Simple financial software that will help you with budgeting is all you need. Get Quicken or Microsoft money for about $100 and use their budgeting tool and you’ll be $3,400 richer and equally as capable of paying off your debts. Well, actually you’ll be more capable because you’ll be $3,400 richer.
02 Oct 08 at 10:09 pm
Rachel -
It’s hardly that (a personal accountant). First, the agents, almost without exception, are innumerate, they don’t understand anything to do with finance let alone the very system they are peddling. They operate in the gray area of selling a software product but not legally a financial product, so they avoid the need for certain truthful disclaimers.
Second, they offer no advice on the rest of the financial planning picture. If you work for a company offering a 401(k) with any kind of matching, that would be a better choice to put money before paying off one’s mortgage. In your case, a pretax (traditional IRA) is likely a better choice than prepaying. Likewise, saving in a 529 for a child’s college education may also come before the mortgage prepayment.
In the end, prepaying is a personal choice, but there’s no magic in it, your money goes to pay extra principal if you make payments higher than the regular amount due. The MMA sellers talk about the financial collapse as a reason to do this. I offer the opposite. Would you rather have a house that you bought for $500K, now worth $250, with a $495K mortgage and $375K in your 401(k) or that same house, but you only owe $250K (and no retirement account?)
A lot of good all that equity is, if the banks are not lending against it.
Joe
02 Oct 08 at 11:35 pm
I am still waiting for a simple mathematical proof from any supporter of the MMA program demonstrating why this works. I would specifically like to see if the MMA approach pays down the mortgage faster than simply remitting additional payments to your lender.
If I missed an earlier posting that attempted to provide such proof, please direct me accordingly.
Yes, I realize that I don’t need to know the electronic and mechanical functions of my car to prove that the car actually works. Nor do I need to know chemistry or pharmacology to prove that aspirin works. However, since I can’t test drive the software (for free!) the only other potentially undeniable proof is math.
03 Oct 08 at 10:54 am
Totally cool. Tracy, I’m inspired. I didn’t buy usuc, I mean ufirst,
and am looking at budget software with my man. Some friends of ours are conservative and like the “mvelopes” plan with Crown Financial. Any thoughts?
03 Oct 08 at 11:39 am
I have heard things about Crown Financial, although I have no direct experience with them. I would give the software a 30 day try. I think that’s enough to get a basic feel for it. Then I’d personally sign up for one quarter to give it a little better test before signing up for one of the longer term plans.
And before the UFF cult members jump on me… Yes, I know there’s a cost to this program and I know she could do it on her own (which is my biggest argument AGAINST UFF.)
I’d rather see her try this though, than UFF because it’s not a huge upfront cost that will never be recovered AND the cost is reasonable AND she’s not tied into it for longer than she wants to be AND the program doesn’t get her in more debt AND the program doesn’t rely on some nonsensical money shuffle that wastes time and doesn’t save any money. It just makes far more sense.
03 Oct 08 at 12:59 pm
WWW, don’t hold your breath. The agents don’t know how it works, and every time we run a challenge and beat the MMA report by sending the same money directly to the high interest debts first and then the mortgage, instead of filtering it through the pointless HELOC, they’re shocked. Then they retreat behind, “Then why isn’t everybody doing this?” or my favorite, “Shut up it works!”
To show you why agents don’t know how it works, I can email you instructions for accessing UFF training materials. UFF training materials are great. They include videos, Powerpoint presentations and documents related to marketing the MMA. If you look carefully, you can even find graphs and slides where they gloss over the math. Never is the MMA actualy compared to what a homeowner could do on their own with the same money the MMA uses. They don’t even explain amortization. When a UFF agent meets a homeowner, which of them is more versed in mortgages is a tossup. As the agent has probably already bought, my bet is on the homeowner.
If you want to take a look at the training site, send a request email to itscraighansen at gmail dot com.
03 Oct 08 at 1:41 pm
Given the current real estate market, how many homeowners still have sufficient equity or LTV left in their properties to even get an HELOC today? I assume that a HELOC is necessarily required for this purported program to work.
For those of you who still have good LTVs, be sure to negotiate the margin on your HELOC since it may not be a disclosure item.
03 Oct 08 at 1:45 pm
W^3 - the truth is out there.
Look at debtfreeproject’s example
which offers a year’s MMA in action. Total year end debt = $185,486.95.
Then see my page which offers month by month transactions and shows a year end balance of $185,208.41, $278.54 less. The agent does *not* account for the fee. That’s ok by me. His own example (from UFF) is all we need to see that prepaying beats the MMA program. For all its ’sophisticated algorithms’, it doesn’t create any savings at all.
You want more ?
UFF offers the full examples, paying the mortgage in 10.4 years (125 months) This one includes the fee.
The simple spreadsheet or calculator shows a payoff after 122 months.
What’s missed in the MMA examples is how you need to reference the software for every transaction you make each day, every single purchase is what they suggest. The spreadsheet/calculator approach simply has you pay your extra month end money to the mortgage, saving you the hours per month of effort. Time you can spend as you wish…..
Joe
03 Oct 08 at 3:06 pm
WWW - UFF was ready for the HELOC problem. You can now use their product with a credit card account. Lord help us all. That’s all we need… more financial illiterates making more use of risky credit cards.
03 Oct 08 at 3:23 pm
JoeTaxPayer:
Where is your page?
03 Oct 08 at 3:39 pm
To avoid spammers’ links, this blog doesn’t seem to permit outbound links aside from the ones linked to our names. Please click on my name above, it will take you to a list of links, I refer to Travis Mitchell’s site as well as my own spreadsheet response.
Joe
03 Oct 08 at 4:50 pm
Not true Joe. You should be able to leave a link. If it’s not working w/ html code, then just put the link by itself and see what happens.
03 Oct 08 at 6:50 pm
JoeTaxPayer:
Found your page as well as the link to debtfreeproject. On debtfreeproject, the author is claiming that the mathematics behind the software is subject to intellectual property (“IP”) protection and therefore it’s a secret.
This may seem like a load of bunk; however, a 1998 patent case, State Bank & Trust Company v. Signature Financial Group, Inc., 149 F.3d 1368 appears to support the patentability of business methods including the mathematical formulas provided they are of some practical application and not just an abstract idea. For you math nuts like me, this has got to be a very interesting read.
Notwithstanding the IP claim by the author seems a little flawed since a filed patent claim would generally reveal the process that one is trying to protect. If they want to protect the “mathematical algorithms” from inquiring minds like me then they should not publish it by filing a patent because at some point it will be available for viewing. Am I missing something here my IP attorney friends?
If they reveal the math and it is objectively verified then I will support the promotion of their software provided they reduce the rediculas price!
What say ye?
03 Oct 08 at 7:29 pm
W^3 -
What I say is that in one example MA lags by a couple hundred bucks in just 12 months not taking the fee into account, in the other example, over the full 10.4 years it still take 3 extra months to pay off as compared to simple prepaying. Given the hundreds of hours of attention one must pay to the MMA software over that time, 120+ months, a couple hours a month, it’s really just a waste of one’s time. Even free, the simple prepay methods we advocate are a better result.
Joe
07 Oct 08 at 9:16 am
How can you people judge a program without even giving the program a trial…. it seems here that there is a lot of people with broken hearts
07 Oct 08 at 3:07 pm
Al - The same way that I know cancer and murder are bad. I’ve never had cancer, but I can say definitively that it’s a bad thing. I’ve never been murdered or committed murder, but I’m pretty sure that’s a bad thing too. I don’t have to pay $3,500 to UFF to know that their program is not worth $3,500. I’ve done the research and I have the facts.
07 Oct 08 at 4:40 pm
Al:
The promoters of the program claim that the “secret sauce” of the software is in the underlying mathematics. Fortunately, as a science, mathematics is objectively verifiable. Thus, the promoters are either right or wrong - there’s no in between.
My point is that the math can be verified without buying the software. So just release the math. What’s the problem?
07 Oct 08 at 4:56 pm
LOL - Because as of this moment all agents have plausible deniability. They can pretend they don’t know that DIY works better, is easier, and is cheaper.
12 Oct 08 at 3:47 pm
This MMA program is nothing but another way for predatory monsters to separate good people from their money. (Good = Gullible some days…) I realize that most people have difficulty adding extra money to their mortgage each month. After all, we are constantly bombarded with the concept the we “deserve” a big expensive lifestyle. Just look at the “Housewives” franchise on BravoTV. It’s a bragfest on wealth and outrageousness.
Bruce, you are the classic example of the perfect victim. You won’t do the simple task of making a higher payment each month yourself, so you rely on someone else to tell you to do it AND you’ve paid them to tell you to do it. They aren’t actually taking control of your finances and putting you on a small monthly allowance and making all of your payments for you, right? You should be ashamed that you won’t do this yourself.
Predatory Con Men are only one part of the equation. The other half is occupied by people who refuse to take control of their own lives and finances. Buy a Suze Orman book for $24.95 and it’ll tell you how to do the same thing that you’ve paid $3,500.00 to know. You can’t get your money back. It’s a legitimate service… FOR LAZY PEOPLE!
Stand up and educate yourselves people! You can only be manipulated if you’re open to it. Guard your finances like you guard your life!
12 Oct 08 at 8:52 pm
ShhShhTheIdiots…
You have presented a hard pill for many to swallow, especially after they’ve been fleeced out of the 35 Franklins. I like the part about the “predatory con men” because that is what most MLM recruiters are. These money management cons just make the irresponsible even more so.
How many ways there is to describe the utter stupidity of this program, no one really knows? Joetaxpayer has thrown down the gauntlet for sure, and now you pile on with your observations. I’ll bet there are some people out there doing some heavy rationalization on how they could have used the 35 g’s for something truly important? Maybe a class action suit might help stop the madness?
01 Nov 08 at 1:28 pm
I am glad I read all of this. I am pretty good at math, but have continued to stuggle with the financial discipline and not spending “left over” money. I was recently presented with the MMA system which we can’t afford. We don’t have a mortgage, we just have a lot of debt. Can any of you suggest a software program that is similar to the MMA system that will show us the best way for us?
I have read Dave Ramsey, Suze Orman, consulted mortgage advisors, and even a financial planner. All have conflicting opinions. If you have extra money, should you pay more towards debt with higher interest, highest cashflow output, or smallest balance? All three have their benefits and will save you money, but for the undisciplined, it’s not a simple answer. Overall you will save money with paying the highest interest, however, that may take a while before you feel the effects of what you are doing. Paying the one with the highest cashflow output will free up more of your monthly budget, and make life easier. Paying the smallest balance will make you feel better, kind of like setting small goals.
I haven’t seen the MMA software for our situation, but it seems to have the answer. Is there another software that is cheaper that can also show us the answer, but will also take in to account the “human” aspect?
01 Nov 08 at 2:46 pm
I have the perfect system for you: Paper and pencil.
The way that will save you the most money is by paying extra toward the debt with the highest interest rate. Yes, the others have other ways that they teach because they feel they are easier or help motivate the consumer more. I’m all about paying as little as possible, so this way is the best.
Every month, pay the minimum on all cards. Use the rest of the cash you have earmarked for debt (which is hopefully just about everything you have left after paying the required bills) and pay it toward the debt with the highest interest rate. Use the paper and pencil to list all your debts and rates for yourself so it’s easy to see.
Next month, do the exact same thing. No software purchase is necessary.
If you want to use a software package to help budget, I’d suggest Quicken. They’re now even offering their online version completely FREE.
01 Nov 08 at 2:52 pm
Call each CC lender. Tell them you have a transfer offer for zero interest for a year with another bank, and that you’d rather stick with them if they’ll lower your rate to something more reasonable. This can’t hurt and will only cost you the dime for the call. Odds are, it will work. As Tracy said, pencil and paper, there’s no magic involved. Balance * interest rate = monthly interest accrued. $1000 paid toward the 18% card saves you $15/mo, vs throwing it at a lower rate card that may have a lower balance, that approach is just stupid, in my humble opinion.
Joe
13 Nov 08 at 9:45 am
Subject: what I would put on the website
For twenty years I’ve been originating Government loans and have always told people to pay extra on their home mortgage. Doing this would save them thousands of dollars in interest. “Just making one extra payment per year will take 7 to 8 years off the term of your loan”. After twenty years and thousands of customers, I’ve never met ONE customer that ever did this on a consistent basis. What stops them from doing such an easy task? Before I answer this question let me tell you about myself. I’ve owned a mortgage company for 16 years. I’ve dealt with first time homeowners and people in their late 80’s looking for additional income through a Reverse mortgage. I hear peoples’ life stories every day. The last two years have been the worst years in the mortgage industry since the 18% interest in the 1980’s. I am proud to say, my company DOES NOT HAVE ONE LOAN IN FORECLOSURE!!! NOT ONE HOME OWNER HAS BEEN LATE ON THEIR MORTGAGE! Now let me tell you why people never pay extra on their home loan. My friends, LIFE HAPPENS, the kids need this, my spouse wants that, vacation, new flat screen TV, LIFE IN GENERAL. If I pay extra, that money has just come right out of my pocket!
That having been said, I would like to ask you a question: What is your equity doing for you? What is your equity doing?!! Your equity is sitting there waiting for you to sell your home so you can put it into your next house, or you’re using it to pay off consumer debt. I put my equity to WORK, by using the MMA program. Did you know that 99% of homeowners’ know that they can pay extra toward their mortgage? Did you know only 1% of homeowners will ever do this? Maybe you can pay extra on your mortgage sometimes. That’s great! Congratulations! But most people need help and that’s what the MMA Program offers homeowners. It’s an easy way to use your equity to payoff an amortized loan.
On January 1st of a New Year most people will say ” I’d like to lose a few pounds”, so they join the YMCA and start working out. This may last a week or so then they stop. Others may hire a personal trainer and stay with a workout routine to reach their goal. MMA program is a personal trainer to help you payoff your largest debt, which is your mortgage! The program tells you the exact amount to pay and when to pay it. You actually skip years off your loan. Can you do this on your own? YES!!! But will you? In 24 months under the MMA program I’ve moved up 106 house payments on my amortization schedule. That’s a saving of $295,210.00 in house payments I will never have to pay. Could I have done this on my own? Maybe. Would I? Statistics say, no. The bottom line is the program pays for itself in the payments I no longer have to make.
Paying off your mortgage should be one of your top priorities. Paying off your home loan will change your life. It will change your retirement. For me, in six years with MMA I will do just that! With the MMA program I know what date I will accomplish this task. When I made my 11/01/2008 house payment I knew that payment was being applied as my 09/01/2017 payment on my amortization schedule. I moved up 9 years on my amortization schedule.
I don’t know why you feel so negative about the MMA program. What I do know is that its right for me. This program just helps people to become mortgage free much faster. Take this challenge for six months and try to do this on your own. Be honest with yourself. See if life get’s in your way.
With the MMA program it’s never been easier to payoff your mortgage…… You have nothing to lose but the interest you pay on your mortgage.
Brad
13 Nov 08 at 10:29 am
Categorize Brad’s comment under “Lies Told By UFF Agents.”
Brad decries paying down a mortgage to get equity, and then suggests that homeowners do just that with the Money Merge program. He says that UFF helps consumers “Put that equity to work for them.”
No it doesn’t. It does nothing different than simple prepayment of the mortgage without paying $3,500 for access to the software.
He claims that someone UFF is the key to homeowners actually making prepayments on mortgages, when they could have done that all alone for free. There is no magic to UFF and it doesn’t “put your equity to work for you.” It does the exact same thing as simple prepayment, but at a higher cost and with a lot of time wasted.
13 Nov 08 at 10:50 am
Brad - you regurgitated the same odd analogies your peers offer.
The gym example is precisely why the motivational side of MMA is bunk. The discipline required to add a bit of principal to each month’s mortgage payment is a fraction of the effort required by the constant attention (one agent suggests you text message MMA from the supermarket to determine if it’s the right time to buy steak) the program requires.
We are so negative because of the combination of exaggerated (all are easily documented) claims, and fact that use of MMA lags the results of simple prepayments. I’ve turned more negative as I become aware of banks freezing HELOCs and the one chance for MMA to recover a bit of its own cost goes away. I’m sure more stories will surface about the economic lives destroyed by the cancelled HELOCs and the results of MMA customers needing to borrow money at 28% on credit cards for those “life happens” moments such as a failed transmission or unexpected need for kid’s braces. How do you propose that clients pay for these things once they’ve directed all their savings to their mortgage and thanked MMA for directing them to do so, once their HELOCs are frozen? This question is not rhetorical - please answer, and be specific.
Joe (who is now inspired for another post in my ongoing series)
13 Nov 08 at 1:15 pm
Brad,
I paid extra towards my mortgage. Every month. I set it up an automatic extra payment with my bank. My mortgage acceleration was truly on “autopilot”. All I had to do was monitor my bank balance to make sure I wasn’t overextending myself. If I was, I could ask the bank not to make the extra payment that month.
It was ridiculously easy. Now I’m mortgage-free, and I didn’t have to send $3500 to anyone to buy inefficient, time-wasting software.
So now you know someone who paid extra on a consistent basis. I’m sure I’m not the only one you know, either. All the ones who shake their heads after hearing your sales pitch, for example.