United First Financial scam: You’re using the bank’s money to pay down your mortgage
Banking 101 – If you’re “using the bank’s money” it means you’ve borrowed it from the bank and you’re going to pay interest to “use” it. You don’t get to use it for free.
The United First Financial Money Merge Account supposedly uses “the bank’s money” to help you pay off your mortgage faster. After paying the $3,500 admission fee, you use Home Equity Loan (HELOC) funds to pay down your mortgage, and then you use your paycheck to pay down the HELOC. (Confused yet?)
The idea (sort of) is that instead of putting your paycheck into a checking account and letting the money sit there until you need it to pay bills, you can use the Money Merge system to “put your money to work for you”. Essentially, until you actually need that cash, it’s being used to reduce what you owe on your house. So you get a week or two of reducing your interest on your mortgage through this money shuffle.
That adds up to a whopping couple hundred dollars a year saved with the money shuffle that UFF promotes with the Money Merge account. (Your real savings is in prepaying your mortgage each month… That pays down your balance faster and saves you interest. But you can do that for free without the Money Merge account.)
But here’s where the lies get interesting. From some UFF training documents:
Do I really need a HELOC? Why can’t I use my savings account?
In order for the MMA program to function properly, you will need a HELOC because you are using more than just your money to satisfy your debt. The program also utilizes the bank’s money to pay down the debt.
That statement is completely misleading to the consumer. When the user of the MMA does the money shuffle, part of it involves using HELOC funds to pay down the first mortgage. Guess what? A HELOC almost always has a higher rate of interest than your first mortgage.
You’re not “using the bank’s money” to pay down the mortgage. You are borrowing funds from your HELOC (higher interest rate) to pay down your first mortgage (lower interest rate). At some point your paycheck gets deposited to the HELOC and the money shuffle is almost complete.
A UFF agent will tell you not to worry about this HELOC borrowing, because the time for which you’re borrowing the money is short, so the interest you’ll actually pay is low. That may be true, but who in their right mind would use more expensive borrowed funds to pay off less expensive borrowed funds? Even for one day?
It makes no sense, and the key to getting consumers past this kind of logic is by pretending that “you’re using the bank’s money.” Sure you are. And the bank is lending it to you at a higher interest rate than your first mortgage. That’s not helping the consumer. That’s hurting them.
Which is precisely why your agent won’t explain these details to you. Who is going to pay $3,500 to use a program that has you use higher interest debt to pay off lower interest debt? Who is going to pay $3,500 to do a silly money shuffle with your paycheck and HELOC that will (at most) offer you a couple hundred dollars a year in savings?
Keep your $3,500 and prepay your mortgage for free. Don’t get conned into this silly scam that uses a confusing money shuffle and outright lies to convince you it works.
Related Posts
- The UFF Money Merge Account money shuffle explained
- Misleading consumers in the marketing of United First Financial Money Merge Account
- What does another expert say about mortgage acceleration programs like United First Financial?
- United First Financial Lies: You can pay off your mortgage faster with no change in spending
- Joe Taxpayer’s five part Money Merge Analysis
Eugene – Unfortunately, the customers of UFF are too ignorant to know there’s a better way. They don’t understand that they’ve flushed money down the toilet. Sad, but true.
If my memory serves me, Eugene Seibert is agent number 833120.
So you yourself are a fraud posing as a customer with no other interest except to help other people. In fact you don’t help people, you just get your cut of a product that adds no value to one’s finances or one’s life.
Why do you not disclose this? I know – there a chance it’s merely a coincidence, I’m sure there are hundreds of Eugene Seiberts out there, perhaps you are not the agent?
Well Joe I’m sure what he really meant was that he was a customer first and was just so happy that he became and agent, and woopsie, he forgot to mention that part.
You are both wrong in your thinking. I indeed am an agent but yes also a customer and yes Tracy became an agent because of the love of the product. I speak as a client on this page because I have no benefit from any of the people on here and wanted to be sure that I was not trying to “attract” their business and thus have personal benefit to helping them. It is no benefit whatsoever to me if they purchase the software from whomever would be showing it to them. So, on the contrary, I left out the fact that I am an agent so that I would not be advertising for myself on this blog. All the things that I have mentioned have been true just the same and I want to see people get the benefit of the program in spite of whomever the agent may be showing it to them.
Not one of the skeptics has yet to come up with a good reason why Ernst and Young (One of the largest accounting firms in the world … certainly not a company that knows anything) would give a prestigious award to the owners of UFF. No one is yet to help me understand why Success from Home Magazine would put UFF on the front cover with over 100 pages dedicated to the company. This magazine is all over America in National newsstands. UFF has also been front cover feature of Mortage Planner, Broker Banker, True Wealth and Real Estate Investor. Real Estate Investor also gave UFF an award. This is all documented. Usually national magazines don’t run large articles on fly-by-night, scam companies.
You know what Joe and Tracy … you don’t have to like our product, nor even think that it is a good deal. That is your own choice. That is not the argument here. I entered this string simply because you portray UFF to be a SCAM and I think that it is a huge attack for a company that is truly helping people. Nothing about UFF is “scamming” people. They hide nothing, and they support what they sell with an incredible home office. I’ve never seen any kind of SCAM do anything like that.
By the way Joe taxpayer, you remember me? Have we met before?
Of course we came up with a good reason for the E&Y award: The founders figured out a way to make gobs of money off unsuspecting consumers. That’s what the award is about – A good business plan and a profitable business. They didn’t evaluate the MMA product prior to giving the award.
The magazine articles you mention are all the typical fluff pieces that are placed by PR people. They definitely don’t offer an independent analysis of the product. They simply parrot UFF’s talking points about the product. (And believe me.. Being in “Success from Home” magazine isn’t really a feather in anyone’s cap.)
I think it’s fair to call anything a scam if it’s being marketed dishonestly, which UFF MMA is. They don’t tell people that they’ll spend less time and save more without the product. They make it seem like a wonder-product, touting “factorial math” and other b.s.
No, we’ve not met. You’d remember me if we did.
Ditto on Tracy’s last sentence above.
Tracy,
I’m sure you personally talked with Ernst and Young so you know that they hand out awards to companies they don’t check out. I’m sure you also talked with the editor of Real Estate Investor … if you had … you would have found that they did an extensive independent research on our company and all of the “competition” that claims to have similar products. They gave us an award upon completion of this research and said that UFF was head and shoulders above any company claiming to do a similar thing. How do I know this? Because I heard the editor of the paper IN PERSON in Atlanta say it with his own mouth. Why did he come to address a conference of several thousand agents … because he believes in the UFF mission which is to help as many people as possible become debt free. That is the real heartbeat of UFF and the owners who founded the company. If you were ever to meet them you would know that that is true as well. I don’t see where you are helping people to get out of debt at all. Certainly by just bashing UFF you are not helping anyone. As many of your bloggers have said here … when you have a tool (not just go do it … if it were so easy they would already be “doing it” and they would not be looking some place for help) that beats MMA than put it on the market.
As for dishonest marketing. The company has not made a single dishonest claim. If you read the companies website of Q&A you will find they are very honest and straight forward with all their answers including the math and including the usage of the clients discretionary income. No fluff, no hype and no manipulation. And as for the cost of the software … we don’t hide that either. It is what it is and it does what it does. If you want to drive across the country you can buy a $5.00 map or you can by a $300 GPS. Neither is right and niether is wrong … it is up to the client to decide whether the cost of the product is worth what the tool will help them to accomplish. Most clients agree that it is well worth the cost and you simply refuse to acknowledge that at all even when they get on your blog and tell you so. You simply revert to calling anyone who disagrees with you stupid and leave it at that.
Speaking of mis-information in marketing. Do you think Pepsi-Cola company is a scam? How about Crest toothpaste? If you want to talk about lies in marketing. Almost every commercial on television is a lie and yet no one is even complaining about this? UFF makes great effort to add no fluff or hype on the webpage or articles published. Simple and straightforward … the proof is in the pudding and the proof is the results!
As the old saying goes … “Man who says it cannot be done should not interrupt man who is doing it.” Myself and the tens of thousands of clients with UFF will continue using our software and smile while we’re doing it. I’m very close to being debt free as we speak and I am very thankful for MMA helping me to get there.
Eugene – You could be even CLOSER to being out of debt without UFF, but sadly you’re too ignorant to understand that.
Yes, I do consider it dishonest marketing when UFF is promoting “using the bank’s money to pay down your debt” or other such misleading statements. I consider it dishonest marketing to say “I saved $80,000 in interest on my mortgage by paying only $200 in interest on my HELOC this month as instructed by UFF.” That is a complete LIE, but it sure is catchy when trying to sell the software.
You and other UFF agents have tried to use the “people aren’t doing it on their own” argument as a reason to use UFF. But such an assertion is false if one just uses logic and reason…. If you have a person not interested in paying down their debt or focusing on their finances, are they more likely to spend $3,500 and several hours per month with a clunky inefficient piece of software? Or are they more likely to spend $0 and 10 minutes a month with a free and easy to use spreadsheet that will get their debts paid off faster?
The truth is that the person who doesn’t care about finances is not going to care about it just because they wasted $3,500.
Your comparison to a map and GPS is all wrong. The truth? UFF is a map that costs $3,500. And GPS is the free spreadsheet. I’ll take the GPS, thank you.
Eugene,
You said:
“No one is yet to help me understand why Success from Home Magazine would put UFF on the front cover with over 100 pages dedicated to the company. This magazine is all over America in National newsstands.”
I can help. Click my name to read a detailed post debunking the “independant 3rd party validation” myth that so many agents claim. The short of it: the parent company VideoPlus L.P. uses it to sell magazines to clients of MLM/direct selling companies and to, in their words (from VP whitepaper), “subtly reassur[e] readers this magazine is offering a solid third party look at the featured direct selling company.” And my favorite, “As you consider INVESTING in a third parth magazine…”
UFF wants you to buy it (remember how it was first offered in your back office only in 10, 24, and 48 packs?) They want to recoup their “investment”. They want you to believe this was some national, independent magazine that was blown away with the product.
As for Broker Banker magazine, well executive publisher Brian Topor has been an UFF agent since early 2007.
True Wealth Magazine “is published by Cutting Edge Medio, Inc., founded in 1991 in attempts to become the leading provider of marketing, advertising, and lead generation solutions for the home business industry.” Looking at their website, you see the statement, “UFirst agents, click here for your special edition.” Agents buying copies of promotional magazines must be good business.
You can have Andrew Waite.
Eugene…I have first hand experience with the dishonest practices of UFF. This product was sold to a family member of mine, who’s monthly expenses exceed her monthly income. It says all over your website that this product should not be for her…and yet, she has purchased it, and due to her computer ignorance, is on the phone with the “home office” or support call center, and yet, NO ONE, and I mean NO ONE has informed her that this software is not for her. Interesting isn’t it?
Marcy – Be prepared for a standard response like “There may be a few bad agents but that doesn’t mean the product is bad.” Can you help force the issue so UFF refunds her money?
So I did my research on these accelerated mortgage payment soft wares.
-There are about 5 of them including, United First Financial (UFF). UFF is the most expensive at a whopping $3500. The cheapest is $995. This means a majority must go to commissions paid on tier level output.
-your monthly net income must exceed your total monthly debts in order for it to work.
-Need a HELOC or line a credit with a low interest rate. If you use a HELOC, there may be tax advantages.
-Paying off 10-15 years faster is obtainable if your mortgage is around $200-300K and you pay an extra $400 a month. If you have a larger mortgage and pay less to principal, paying off WILL take longer.
-if you suck at paying your bills on time, have multiple credit card balances at high interest rates, or too lazy to research how to help yourself then a software prgram is for you.
To me, paying down your 1st Mortgage quicker does not need an software. The ONLY good advantage with the software is seeing exactly how much years you cut off by paying more principal at a monthly basis. I’m sure someone good with excel can create a formula for this (or use this website link http://www.americanfinancing.net/calculators/what-if-i-pay-more-calculator.php )
Simple rules to follow:
-Consolidate all credit card debt into one low interest rate line (personal or HELOC). Credit cards can have 20% interest rate. If you have a line at 5-6%, you are saving a lot
- Make a list of items you spend and from there, budget yourself. Example…eat more at home and bring home lunch, shop around for lower insurance premiums, rent movies instead of going to theater, use food coupons
-keep credit card balances to a minimum or pay it all off at the end of the month
-with the money extra saved from budgeting and consolidating debt, pay directly to principal on 1st mortgage. The more you pay to principal, the faster you pay off mortgage.
With a little research, you can put the $3500 software fee directly to the principal and you are on your way to paying off your 1st mortgage quicker.
Tracey,
You are obviously some what retarded and should be riding a little yellow bus. Please be informed on a topic before you choose to bash it.
Hi Tim – No sense in using any FACTS to prove your apparent differing opinion on this topic, eh?
Tim,
Wow, you went from “Tracey,” to the ad hominem attack in record time. Of course, by attacking Tracey instead of her points, you immediately lost any chance you had at winning the argument in record time as well.
To any interested 3rd-party readers who are researching the Money Merge Account – this is common United First Financial agent behavior. They’ll be nice to you and recite the marketing like a pro, but they have no idea what they’re talking about, and mortgages are likely more of a mystery to them than they are to you. When faced with criticism of the MMA, they can’t debate the subject, so they lash out instead.
On the bright side, at least he was direct and to the point, as opposed to those rambling 4000-word, poorly punctuated rants that Mary Kay distributers are so fond of.
Still, Tim’s not exactly Socrates, is he?
FraudFiles readers might be interested in this list I came across in an unrelated discussion elsewhere. It’s a checklist of attributes that characterize a cult. Do any of these attributes sound like any MLM’s you know of?
The group displays excessively zealous and unquestioning commitment to its leader and (whether he is alive or dead) regards his belief system, ideology, and practices as the Truth, as law.
? Questioning, doubt, and dissent are discouraged or even punished.
? Mind-altering practices (such as meditation, chanting, speaking in tongues, denunciation sessions, and debilitating work routines) are used in excess and serve to suppress doubts about the group and its leader(s).
? The leadership dictates, sometimes in great detail, how members should think, act, and feel (for example, members must get permission to date, change jobs, marry—or leaders prescribe what types of clothes to wear, where to live, whether or not to have children, how to discipline children, and so forth).
? The group is elitist, claiming a special, exalted status for itself, its leader(s) and members (for example, the leader is considered the Messiah, a special being, an avatar—or the group and/or the leader is on a special mission to save humanity).
? The group has a polarized us-versus-them mentality, which may cause conflict with the wider society.
? The leader is not accountable to any authorities (unlike, for example, teachers, military commanders or ministers, priests, monks, and rabbis of mainstream religious denominations).
? The group teaches or implies that its supposedly exalted ends justify whatever means it deems necessary. This may result in members’ participating in behaviors or activities they would have considered reprehensible or unethical before joining the group (for example, lying to family or friends, or collecting money for bogus charities).
? The leadership induces feelings of shame and/or guilt in order to influence and/or control members. Often, this is done through peer pressure and subtle forms of persuasion.
? Subservience to the leader or group requires members to cut ties with family and friends, and radically alter the personal goals and activities they had before joining the group.
? The group is preoccupied with bringing in new members.
? The group is preoccupied with making money.
? Members are expected to devote inordinate amounts of time to the group and group-related activities.
? Members are encouraged or required to live and/or socialize only with other group members.
? The most loyal members (the “true believers”) feel there can be no life outside the context of the group. They believe there is no other way to be, and often fear reprisals to themselves or others if they leave (or even consider leaving) the group.
I have long speculated that the vast majority of MLM companies are cults in disguise.
You might want to include insurance and real estate companies as a cult then, because they have similar structured payouts to owners/agents.
At the end of the day, UFF’s product does what it says it will do and is a very viable product…their agents are trained and are given specific ethical guidelines in writing as how the product is to be presented and represented…..doesn’t sound like a scam to me….and you DON’T need a HELOC to do it. Thats just one example that is used. You can also use personal lines of credit, business lines of credit, or credit cards.
Sure there may be more than one way to accomplish paying off debt quickly, just as you can shop at Wal Mart or Target; Burger King or McDonalds; do it yourself or go to a restaurant.
Sorry, Michelle, but the insurance agent and real estate examples are not comparable to UFF. UFF is a recruiting scheme, the others are legitimate businesses.
The UFF software does not do what it says, and I’m glad you chose this thread on which to post your comment. One of the selling points is that you can “use the bank’s money” to pay off your debt. That’s completely false. So in fact, the product does NOT do what the agents say it does.
If you don’t think real estate and insurance people don’t get kick backs and residuals from people under them….I’ve got some swamp land in the desert to sell you.
I suppose you would tell me that when someone does a high rate credit card balance transfer to a lower rate credit card….that they aren’t using the bank to pay off a card and save hundreds of dollars in interest, right? ummmm….ok.
WOW!!!! It appears to be getting pretty nasty out there.
A shell game by any other name is still a shell game. What I cannot believe is that there are people wasting their time debating over whether it makes sense to “borrow” money from one source… at a higher interest rate simply to pay off debt at a lower interest rate somewhere else. IT NEVER WORKS!!!! Hasn’t our current national economic condition taught anyone a lesson??? Additionally, as I’ve taken the time to review a number of the earlier posts, I have a couple of points to make. First, ALL mortgages are simple interest. The only differences between a “traditional” mortgage and a HELOC are the ability with a HELOC to access the credit line once a balance has been paid down, pay interest only, and watch the interest rate vary with the Fed Funds Rate, since most HELOC’s are based on “Prime”. Historically, and certainly now, HELOCs have higher interest rates than traditional mortgages.
I am not going to waste time getting into any kind of debate over the MLM aspect of UFF (or any other business), but I will say that ALL businesses at some level or another have a multi-level compensation structure. That does not make any of them good or bad (including UFF). Unfortunately, with UFF, there is an expressed value to paying a lot of money up front for something that simply breaks down to discipline and personal spending habits. Something which I feel is not a wise choice.
UFF is a SCAM.
Borrowing at 8% to cover 6% loan will make you less money.
Paying down your mortgage directly (instead of using HELOC) will put you ahead.
Simple short-term interest VS compounding long-term interest: this is just a marketing lie. HELOC uses monthly compounding interest, same as your mortgage.
The only way to pay off your mortgage faster (and to save on the interest) is to increase your monthly payments. You think that you saved thousands of dollars with UFF, but this is not true. You saved thousands of dollars by increasing your monthly payments. You’d save another 10-15% by not using UFF and simply doubling your mortgage payment.
$100,000 at 6% for 25 years = approx. $640/month
$100,000 at 6% for 7 years = approx. $1460/month
WOW! I just reduced my mortgage from 25 years to 7 years and saved thousands of dollars! UFF uneducated retards may think that this is magic, but this is actually simple mathematical computations.
UFF makes you lose $3,500 up front, and some more down the road. And that’s the only truth.
UFF is a SCAM.
Maybe people can do it alone without the investments or wasteful spending like some would say but how many Americans are willing to do all the research themselves? How many even understand the language of investors, bankers, financial specialist, ect.
One thing is clear here to me one way or another you will make a choice either you like it or you don’t.
What do you think the response would have been 50 years ago to a Blackberry cell phone
How many nay sayers would back that something like this would be created?
It seems to me that the $3500 seems to be the issue with everyone complaining not the actual product. Show me the facts about why it doesn’t work (Not from blogs or people with no credibility)There is always going to be some that have to find a reason for an argument not to like something. I haven’t seen anyone (yet) bash the product itself. We know there are those smart enough to figure out the math and good for them they may never pay anyone for anything because they can do it lol jk but really I see the MMA helping people do the work for people who want to keep it simple.
Paige – You need to read the other articles about the product on this site. We’ve discussed over and over what’s wrong with the product.
“Smart enough to do the math”????
“The math” is one addition/subtraction problem. If someone can’t do that, they certainly can’t use the software on a computer.
Can we finally put this issue to rest? I am not a client of the program because I have no debt nor am I affiliated with the company but I have had the program explained to me several times and there are a few bits of the equation that are being left out of the interest comparison scenario. I have read numerous times that is makes no sense to borrow money at 8% to pay down a debt at 6% and that sounds logical but Tracy, please consider the following:
If you were to borrow let’s say $7500 from your HELOC for the purpose of pre-paying your mortgage at 8% you’d have an interest only cost of $50 per month. What you fail to mention in your comments is that part of the whole idea behind using the HELOC is to replace the functionality of a traditional checking account. Most checking accounts pay very little if any rate of return on your deposits. So instead of parking your paychecks in a checking account where the money sits earning you basically nothing, you deposit your full paycheck into your HELOC as a payment. It’s important to note that you still have the same access to your money (or the line of credit) through checks and a debit card. Going back to this example, lets say you earn $2500 semi-monthly for a total of $5000 in net monthly income paid on the 15th and the 30th. Over the course of the month your balance in the HELOC will flucuate as your income (deposits) are paid in and your expenses are paid out of the account. Let’s assume for the ease of math that you spend $500 less than you earn each month. This means that every month you will reduce the balance in your HELOC by $500 minus the cost of interest. Let’s examine the net effect of this method. The first thing to mention is that with a HELOC you are charged interest on the average daily balance of the account, not the months end balance. Based on our example and depending on the timing of the $4500 worth of expenses, the HELOC balance could have been at one point as low as $2500 or as high as $7000. Because of the average daily balance calculation, the actual amount they were charged interest on was most likely somewhere in the middle. Let’s assume for this example that the average daily balance of the HELOC was $4750. I realize this average is completely dependant on he timing of the expenses. The interest cost on $4750 at 8% would be $31.67. Here’s the fun part. At the beginning of the month you borrowed $7500 and prepaid your mortgage. This caused a principal reduction of $7500 and forced an advancement of the ammortization schedule on your mortgage. Simply put, out of the same monthly payment you now have a little bit more money going to principal for every month going forward. Now there needs to be an explanation of stated vs. effective interest rates. So while the month’s end balance is $7000 and yes the HELOC has a stated interest rate of 8%, you used $7500 to prepay your mortgage and paid just $31.67 in interest because you used your income to offset the average daily balance of the HELOC. The effective interest rate in this example works out to be 5.067%, not 8%. It’s my understanding that the purpose of the software is to manage the specific amount of money you borrow from the HELOC and when so that your income more fully minimizes the interest cost. By borrowing a dollar amount more appropriately matched with your income and cash flow, it would be possible to get the effective interest rate even lower. Eventually over a period of months, your discretionary (or the $500 left over) will pay down the HELOC and the system will repeat itself. According to my understanding it would not be necessary to wait until the balance is back at zero since the carrying cost of the HELOC is so relatively cheap. Keep in mind that if the HELOC is attached to your own residence, the interest is usually tax deductible therefore reducing its effective cost even more.
Let’s look at the pesky mortgage once more. Assuming a $200,000 fixed mortgage at 6%, your PITI is $1199.10 and over 30 years you’ll pay $431,676. The effective interest rate for this loan becomes 116% even though the loan is calculated on a fixed 6% ammortization schedule. To be completely fair, if you paid the $500 every month like clockwork to your mortgage without fail, you’d have the same loan paid off in almost exactly 15 years and save $129,000 in interest in the process. Whether anyone is capable of applying every dime of discretionary income to their mortagage is up for debate. What isnt up for debate is the strategy of using a HELOC to pre-pay your mortgage with HELOC funds and using your income to offset the potential interest. Its fact that your income will manipulate the average daily balance in effect reducing the effective interest rate of the HELOC. Whether this method is faster than using the payment + $500 strategy would ultimately depend on the discipline of the homeowner and the practicality of sending every available dime to your mortgage each month.
Here’s my summary. Given that our country is in a precarious position with the large number of foreclosures and massive amount of debt that we have collectively accumulated, it’s obvious that we have a problem. Only 8 states in this country have a basic financial literacy requirement as part of the secondary education system. Debt has reached an all time high as alleged in the newspapers and by other financial “experts.” If it was as easy as some of the comments on this post make it seem, why are we in so much trouble as a nation? I would also love to hear from those who dislike the program, what have been your own results your your own strategies? Are you mortgage free? Have you paid off your houses in as little as 1/2 to 1/3 the time as claimed is possible through the MMA? The cost of the program should not be of so much concern. The average cost of a refinance is easily more than $3500 and consumers will gladly refinance several times just to lower their payments and add another 30 year term to their debt – easily adding to the overall cost and increasing the effective cost of their mortgage. Worse, they are using the little bit of equity they’ve built in the first few years traditionally to cover refi costs. The price aside, if the MMA has a success rate of anything even close to what they claim, what is the value of helping people achieve this goal? Obviously $3500 is a large sum of money by any standard but the standard that should be used to measure the value of this program is the success rate of its clients. Assuming that even with the other suggestions made on this post, the evidence shows that a relatively small percentage of consumers have the inclination or know how to implement these strategies on their own with any measure of success. I realize this doesn’t speak too highly of the average American but that is the sad reality of our day. So..if a program even at the cost of $3500 helps people become accountable and it turn allows them to own their home and be debt free with any large percentage of success the net result means its still a value. Look at it this way. At the end of the day or more like the end of 30 years from now, would you rather have people save $3500 and not be ble to retire because they didn’t manage their money or time properly? Or would you rather have a generation of people that paid for a system that held them accountable and gave them the roadmap to debt freedom? What price would you put on the latter? Getting people out of debt needs to be the end result, whether is costs them $3500 or not.
Tracy, I hope this has been an unbiased look at not only the math but the root problem. You cant simply say that 8% HELOC money is more expensive than 6% mortgage money without taking into account that the purpose of the program is to use their income to reduce the effective interest rate well below the interest rate of the mortgage. I believe my example showed this average daily balance manipulation effectively.
What are your thoughts Tracy? I appreciate your time and look forward to your feedback. Have a wonderful day.
MJ – Your scenario sounds nice, but it’s just plain wrong. You’re asking us to pretend that you’ve paid $7500 down on the regular mortgage for a full month, while only having that $7500 on the HELOC for 2/3 of a month (that’s what you’re saying with that $4750 average balance). Money simply doesn’t work that way. You’re calculating an effective interest rate of 5.067% which is completely fictional because you’ve got the math wrong.
So the borrower is still borrowing 8% money to pay down 6% money, which is a loser.
Yes, there is a small amount of money to be “made” by the debtor who uses the HELOC by depositing their paycheck. We’ve acknowledged that many times here. The problem is that the savings are typically a few dollars a month (maybe as much as $15 or $20 for some). And that savings is more than wiped out by the $3500 cost of the product (and the interest paid on that $3500 if it’s financed).
“Using the banks money” – We started out by taking out a loan called a mortgage, using the bank’s money. Now that it’s time to pay the loan back, we need to get the money from somewhere. Usually, it comes out of our paycheck. But MMA claims that if we use a HELOC, we are not using our money anymore, we are using the bank’s money. But, wait, we started all this by using the bank’s money to take out a mortgage and now we have to pay it back. So that means if we use the bank’s money by taking a loan out of the HELOC, we have to pay that back, too. So all we did was postpone having to pay the bank back by using the HELOC money to pay the mortgage. We still have to pay the HELOC back. Where is that money going to come from? Out of our paycheck. So why should we spend $3500 on MMA to play a money shell game with a HELOC?
“Interest cancellation” – MMA claims that by loading up the HELOC and running our paychecks through the HELOC, we reduce the balance so much that we save lots of money that way, and that alone is worth $3500. OK, so how much can we save? Well, let’s assume our mortgage rate is 6%. That means each month, we are charged 1/2% on our mortgage balance, the whole balance. But if we are using interest cancellation, the most that we can save is whatever our monthly salary is. So, if we bring home $5,000, the largest HELOC balance we can offset is $5,000. How much will that save? $5,000 times 1/2% is $25. That’s $25 per month or $300 per year. So MMA wants you to spend $3500 upfront to save $300 per year. Do you know how much interest you would save if you just put $3500 towards your 6% mortgage? OVER $4,000.
“Factorial math” – MMA claims no one except a computer can figure out the best possible way to pay all your bills and debts because of all the possible combinations. LIES. There is only one SIMPLE BEST way to pay off all your debts. You pay off the highest interest debt first and work your way down using a DEBT SNOWBALL. It only needs addition and subtraction.
MJ -
Last I recall, I authored a guest post here regarding the HELOC shuffle. THe shuffle ‘can’ work, but in the most extreme example won’t produce savings of more than $300/year (given the constraints of the classic example $200K mort, $5k income, etc.) On average, it would likely save closer to $150/yr. Once I watched the UFF videos, I saw that the system is not accurate even to save the small sum. It over-borrows on the HELOC and costs you extra money. The rest of your post is just a tangent. Regardless of the state of anything, one should pay their mortgage off without getting ripped off by a third party scam.
And while Jimmy has been a great fellow naysayer, his calculator key got stuck. The $3500 at 6% over 30 years is $20000. This is what MMA costs you, $20000. $20000 to save $164K in interest you can save on your own for $0.
I have been using the MMA program for about a year and a half now and sware by it. The bank has pretty much gotten to the point where they don’t (can’t really) send me statements because they cannot keep up with the interest. Though I can reconcile the account much in the same fashion as I would a regular checking account. I’ve reduced my 30 year mortgage to 12.5 years (expected) payoff and saved in thousands of dollars in interest costs already. Not only is the principal concept of this program, using an advanced algorithm, ideal for it’s intended purpose, it also shows the projected “true cost” of a considered purchase which is great for considering the real picture down the road on what you are actually going to spend. It also forces one, or rather “teaches” one to implement a budget on a monthly basis. Now, If you can claim to do all this on your own, and perhaps if you are extremely, mathmatically inclined, then good for you, you have a real knack for (and alot of time) to do it. Otherwise, it is a true investment for me. Another thing to keep in mind, and what actually makes this program work, the algorithm, is something you cannot figure out to DIY. Once the interest is paid off on the LOC, the advanced payments really begin on the mortgage interest. ONce you are at a required level you are instructed to make a payment. using this figure, the mortgage is paid down with in the required time. By simply paying down advanced payments on your mortgage or other debts, you do nothing more than pay it down quicker. Keep in mind that in some states, there is a penalty for paying down a debt in advance of it’s schedule.
April – I am glad you are happy. I’ve proven, here, and elsewhere, that (A) I can show anyone how to do it one their own, (B) it will take less time doing it my way than the MMA way, far less in fact, and (C) they will save more, as the MMA math is flawed, also something I never tire of proving.
Why do people continue to believe the myth that paying down your mortgage faster is complicated? This algorithm is BOGUS! Of course, it exists. But it does nothing better than what one can do with one simple math problem each month…
I think it’s the powerpoint slides. The UFirst videos, while mathematically incorrect are well done. People are so desperate to believe there’s hope that instead of learning the truth, and advancing their math skills to a 5th grade level, would prefer to feel they are being ‘guided.’ No different than some of the cult religions. I suppose in a sad way that removing choice feels like a burden have been taken off one’s shoulders.
Respectfully, I disagree with your last few words. There is NO math problem at all. At months’ end, one should pay any extra funds to their mortgage. It’s a stretch to suggest this actually uses any math as they need to write that mortgage check anyway.
The math required for constant recalculation of final payoff date is less than trivial, and beyond the innumerate client. Took me a few hours to write that spreadsheet one weekend. On the other hand, one can easily doe the math (again for final payoff) on a TI calculator, the BA II Plus Financial Calculator. I’m sad to say the BA-35 is no longer in production. It was the first piece of electronics I fell in love with…..
After reading most of this argument, I have to say your both right. (Tracy & Thomas morphing into Eugene). The problem here is discipline. The United First gig is a tool to help people keep disciplined enough to pay off their debts with their “extra cash”. I refinanced my house in the mid 90s and planned on paying it off in less than ten years. Something called “life” happened in the meantime and it’s still not paid off. A few months ago my massuse turned me on to UFF. It’s not working for me because my outgo is greater than my income. If I can discipline myself better I know it will work and it helps me keep an eye on my terrible spending habits. The HELOC has a lesser interest rate than the credit cards I paid off, and I recently got notices from them that their interest rates are going up, so I’m ahead there I suppose, but the UFF is helping me see where my money is going so it will help me stop spending recklessly and be more, I’ll say it again, “disciplined”. (Discipline is not an end in itself, only a means to an end. Robert Fripp & King Crimson)
Billy,
Here’s a thought…could spending $3500 on a piece of software with far inferior budgeting tools than a $80 copy of Quicken or MS Money be part of the “discipline” problem?
You needed help sticking to a budget, but you didn’t buy budgeting software. You bought a broken mortgage accelerator.
The concept behind the money merge account is a paradigm shift.
Anyone who slams this phenomenal software cannot think “outside the box”. The fact that this software has been proven effective many times over by people who use it in the way it is intended to be used is not enough for people who live inside the reality that others have defined for them.
Look up “paradigm shift” and you will understand how small your world is, and only because you do not care to think beyond what you have learned from other “educated” individuals.
I will admit that the concept of flushing $3,500 down the toilet on inefficient and worthless software that causes me to pay off my debts slower than without it…. that is definitely a foreign concept to me.
“One person making stuff up is a liar. A bunch of people making stuff up are creating a new paradigm” – Red & Blue
Idiots.
Excellent post Tracy. These UFF guys are slick snake-oil salesmen, conning the naive into believing that if you borrow at a higher HELOC rate in order to pay down a conventional mortgage (most often at a lower rate), YOU WILL SAVE MONEY?!??!? How! Why, it’s MAGIC!
And here in Utah, when you throw a little faith-healing into the mix, why – you’ve got yourself another MLM to sell! Now, add some teary-eyed testimonials (as some of your respondents have done)well, you’re on your way to millions. If you try to use analysis and logic – watch out, they’ll turn on you (see posts above). What do the creeps at UFF do? Do they actually do any factual analysis? Heavens no! They just trudge out more weeping testimonials – the most common ploy in snake-oil MLMs.
Tracy – keep fighting the good fight! UFFers are nothing but scammers, trying to separate fools from their money.
Folks, keep the $3,500 and pay down your debt – you’ll be much better in the long run.
Are yuou sure that what you say is fact? We never said it was magic, the problem that you guys have is transferrance of knowledge. Could you teach a person to do it and when something does not add up right will you be there for that person? And just how much of your time do you want to spend trying to figure out what the software is doing instantly. I don’t know about you but convenience is cool. The other thing if everyone was so smart why are they not currently doing it. Our software gives a person instant discipline. How about this one,most people will spend $3000 to $10000 in closing fees to get in debt, and not only to get in debt but over time most will pay the lender twice the original amountof the property in the first place. Here is a thought people can clean their own houses, but there are some people who pay people for to do it for them. The question is not of price but of benefit. For a lot of people it’s not about the money it’s about their time, which they would like more of, and certainty of knowing when they will be out of debt. A system that is and has been proven, ernst and young, personal real estate invester mag. and many others have endorsed our product who endorses yours.
Thank you for that bit of eloquent wording.
E&Y didn’t endorse UFF.
UFF is not convenient. It wastes tons of time. And the company isn’t therefore anyone, except if it’s to collect that check. Otherwise your debts are your problem…. just use the software and shut up. Paying down your debt is simple, and this software doesn’t create discipline in anyone.
Ellick: “We never said it was magic, the problem that you guys have is transferrance of knowledge. Could you teach a person to do it and when something does not add up right will you be there for that person? And just how much of your time do you want to spend trying to figure out what the software is doing instantly.”
Here’s the complicated algorithm to reduce debt at the most rapid rate, Ellick.
1. Cut expenses as much as possible.
2. Do you have any money left at the end of month/week/whatever?
If yes, pay the leftover money against highest cost debt.
If no, cut expenses further and/or increase income.
3. Rinse and repeat.
(please send me $3,500)
Mel said: “Anyone who slams this phenomenal software cannot think “outside the box””.
Mel, the math is very much inside the conventional box of any spreadsheet app or financial calculator. The box you are outside of is the “ethical box”.
Ellick – Why not talk some numbers with us?
$200K Mort, 6% int, 30yr. HELOC available at the same 6%. No other debts to consider, and just $200/mo after all expenses are done. The client has income of $2500 twice per mo net.
Want to tell us what your system can do with this?
To be blunt about it, the analogies, hyperbole and ad hominem attacks are all getting boring. From Tracy’s blog here, and agent sites, I keep reading how one must enter their transactions, every penny spent every day, into the software. One agent considers it a ‘good’ thing that you can “text the software from your cell phone to see if today is the optimum day to buy the steak that’s on sale at the grocery store.” Yet, right now, I handle my money every other week, and when I choose to make an extra prepayment on my mortgage, it’s about a 15 second transaction. The endorsers you cite are either award sponsors, or trade journals, so what? And your clean the house analogy fails at so many levels I don’t know where to start. But let me spell it out for you, the people who clean our house get about 1/3 of my wife’s or my hourly wage. So we spend 1 hr of wage to save 3 hours of our time. You suggest that one spend about a full month’s wage to then waste a few hours of time per month and come up short on their mortgage. Last I went head to head with the MMA program, it came up months short even if it were free. The $3500 just put it further behind.
Take the challenge above.