DanielBl, you say I have "hopeless" math skills; would you say that you have good math skills?

Here is a little test for you...12 questions...

1) Applying one lump-sum prepayment to a 30-year $200,000.00 mortgage with an APR of 6% will save over $42,000.00 in bank interest charges that I will never have to pay...true or false?

2) $42,000.00 is a lot of money...true or false?

3) If I use my line of credit instead of my chequing account, and I earn $5,000.00 net income per month and have $4,000.00 in bills per month, then I have $1,000.00 that could be called discretionary...true or false?

4) I can use that line of credit to borrow $10,000.00 to make as a prepayment on the above mortgage example...true or false?

5) If I then deposit my income into this line of credit, the line of credit balance will be $5,000.00, not including interest...true or false?

6) If I then spend my $4,000.00 in bills, I will then owe $9,000.00 plus interest on my line of credit...true or false?

7) If I deposit my $5,000.00 net income and pay my $4,000.00 in expenses the next month, I will then owe $8,000.00 plus interest on my line of credit...true or false?

8) If I repeat this process on a monthly basis, I will reduce my line of credit balance by roughly $1,000.00 per month, thereby paying off this line of credit in ten or eleven months...true or false?

9) If I pay ten or eleven months of line of credit interest, EVEN IF MY LINE OF CREDIT INTEREST RATE IS 10%, I WILL PAY LESS INTEREST ON THAT CREDIT LINE THAN $42,000.000...TRUE OR FALSE?

10) If I pay less than $42,000.00 in line of credit interest in order to borrow $10,000.00 that I will apply as a prepayment to my mortgage, then this is a bargain...true or false?

11) Canada is a predominantly free country...true or false?

11) If this is a free country, I can do this on my own, without the Money Merge Account system to monitor my finances and provide ongoing mentoring services, or I can choose to spend $3,500.00 of my money and purchase the Money Merge Account system...true or false?

12) Regardless whether I decide to use or not to use the MMA system, I have the ability to pay down my debt, provided I am serious about doing so by exercising discipline and determination to do it on my own OR I have the ability to pay down my debt, provided I am serious about doing so by exercising trust and obedience to follow the prompts and reminders of the MMA system...true or false?

By the way, I do not write such interminably long winded vacuous apologetics to my Money Merge Account clients, because most of them are far more open minded than you seem to be, and most of my MMA clients actually do not think they know everything there is to know about money?

DanielBl, do you know everything there is to know about money, or is it possible that you might be able to learn something some day that you do not already know? Just curious! ;)

By the way, I have no desire to be involved in the mortgage industry; I sold my mortgage business to my former partner in order to service my Money Merge Account clients full time, which I have been doing since October, 2008.

No one called you an idiot. That is not allowed on the forum. They only said (actually showed) you were cognitively challenged.

You say that I am an idiot? Well this "idiot" has some questions for you, since you know so much about money...

I borrow $10,000.00 from my line of credit and invest it somewhere, you would say I am not leveraging?

So you have a chequing account that pays you 4-6% interest?

So you think all the Money Merge Account system does is tell you to write a cheque?

Do you believe that we do NOT have a personal debt problem in Canada? Are you suggesting that what consumers have been doing up to now HAS been successful at reducing personal debt levels?

What, exactly, do I not know about interest rates?

You mention investment returns. If I send a $10,000.00 prepayment to my 30-year, 200,000.00, 6% APR mortgage, do I or do I not save over $42,000.00?

If you agree that I do save $42,000.00 in this case, would you say that I am not exchanging $10,000.00 of my money in return for over $42,000.00 in interest?

Is it true, or is it not true that making this prepayment will completely cancel this interest charge? Can the bank ever charge me for this interest, once this prepayment has been made? If so, is this not a pretty good return on my investment?

Ken, Ken, Ken... I don't know anything about you.... except you have hopeless math skills. (If the line of credit and has a higher interest rate and revolves for the same term as your mortgage, of course you will pay more.)

The fact that you write such interminably long winded vacuous apologetics for your infomercial quality product should be an immediate red flag for any potential customer.

Perhaps you choose to post such dribble on this site because this forum has rules of posting that forbids others to criticize charlatans and spammers. But rest assured, if you go most other forums where they call a spade a spade, you won't get such a warm reception.

Just a personal suggestion: If you want to be involved in the mortgage industry, why don't you go back to school and get legitimately certified and try to get on with one of the banks or countless other lenders out there?

"There are no smoke and mirrors here; all we are doing is using leverage to cancel interest instead of paying our own money to our debt; it is really no big deal. Of course there are interest costs in the line of credit; I'm not stupid...this is simply a matter of doing a cost/benefit analysis."

Ken....more lies. You aren't leveraging ANYTHING. You are actually DEleveraging your money by adding interest costs and an additional $3500 in principal. Leveraging would imply getting more for your money, not less. MMA CLEARLY gets you less.

"Are you suggesting that we all should keep putting our money into our chequing accounts so the banks can use leverage with our money and lend our money out at exorbitant credit card interest rates? If the banks can use leverage, why can't we?"

Well, an interest bearing checking account would actually leverage your money by letting you pay down your mortgage with interest earned. My checking account paid me between 4% to 6% while I was paying off my mortgage. That gave me a small bit of leverage. I kept my few thousand in the bank for two weeks before I made my payment. More effective than MMA.

"However, the Money Merge Account is for individuals who have had the ability and desire to prepay their mortgages in the past, but have simply not done so for whatever reason. For these individuals, would you rather they continue to stay on the bank's set amortization schedule and pay $228,271.02 in total interest costs over the life of their 30 year mortgage?"

Paying $3500 for software that tells you to write a check is a terrible investment. Period. It doesn't even do the math correctly (it's very sub-optimal for the chosen approach). I would suggest actually learning about interest calcs so you can understand what you are doing and can apply it to more than just your debt repayment. Too complex? I guess if you failed 5th grade math (and that's being generous). If one is dead set on using an MMA approach for whatever stupid reason, use teh $25 spreadsheet versions out there.

"1) They can pay off their debt on their own, without MMA,
2) They can achieve just as fast debt payoff, and possibly faster without MMA,
3) They really do not need to spend $3,500.00 on MMA...

does this make me a bad person?"

#2 is wrong...MMA is ALWAYS slower. A-L-W-A-Y-S.

#1 and #3 don't make you a bad person, the lies you've posted earlier about incorrect interest rates make you a bad person, possibly a criminal.

"1) My finances will be monitored as long as I have debt,"

or as long as the company is afloat...which sounds like less than a year. and monitored is different than managed. $3500 should get you managed.

"2) I will receive financial mentoring and coaching on an ongoing basis,"

coaching so good you don't understand interest rates or future value of money. you are a financial buffoon.

"3) I actually have a mortgage, a car loan, a student loan, a personal loan, a line of credit, a Visa card, a MasterCard, an American Express card, and a Sears card...all with balances. Now I suppose I could try to figure out to what debt I should be sending prepayments, taking into account the credit limits, balances owing, payment amounts, interest rates, and lengths of time to pay off each debt in full, but just the thought of doing this myself is simply overwhelming! I need help, and I am very willing to pay $3,500.00, just to give UFirst a chance,"

or you could just pay minimums to all of them except the highest interest rate (after taxes) loan, which you send the minimum plus your leftover money eachmonth, and be done the fastest. It's exactly that simple.

"4) My income sometimes varies from month to month, and I am pretty sure I will not stick to my own DIY plan in those months in which the sum of my total monthly expenses exceeds my net income for that month. With MMA, I will be able to simply trust and obey my monthly list of prompts and reminders, and everything will work out just fine."

Yeah, writing a check is hard. Balancing your checkbook is hard. Note sarcasm for the idiot.

"5) My wife is expecting a raise in pay soon. It is not a big raise...she is simply switching from semi-monthly pay to bi-weekly, and she is getting a $10.00 increase per cheque. If I inform UFirst of this increase in income, they will be able to shave one entire year off my payoff time! I am pretty sure I will simply spend this increase if I attempt to do this on my own!"

No. Flat out wrong. The only way you shave any time off your loan is by paying it to the loan. You are able to spend it either way....MMA software does not prevent you from spending money. Period.

"6) We need to purchase a new car sometime in the new year. I suppose I could figure out on my own what the true cost of this purchase will be, taking into account the amount of interest that I will not be able to send to debt if I purchase this car or that car. On the other hand, I think I will just buy the MMA system for $3,500.00, and UFirst will figure this out for me. This will actually save me a lot of time, and time is money, is it not?"

If you make $10,000 an hour, then MMA MIGHT be in the ballpark of being cost effective in terms of time. Well, you'd have to make a lot more. If you are going to buy a new car, the cost is the cost. If you spend $20k on a car with or without the MMA, it has the exact same effect on your ability to pay off your loan.

"7) I also want to start investing and saving for retirement soon. I guess I could try to discipline myself to do this on my own, but if I don't pay off my debt as soon as possible, it will delay the time that my debt is paid off; therefore, it will delay the time that I will be able to apply the same payment I have been giving to my bank and invest it instead. I just don't trust myself to do this on my own, so can you please take my $3,500.00 and let me purchase the MMA system?"

If you want to start investing in your retirement, the first thing you want to do is not blindly pay down your debt. Properly managed debt is a very effective way of LEVERAGING your money to build up retirement accounts. If your investment returns are higher than your mortgage interest rate, the last thing you want to do is not invest and pay down your mortgage.

MMA = ignorance.
UFF = cult

BTW.....do you tell your prospective clients that the company is for sale because it's failing and the software may disappear with no notice? I'm guessing no.

Hey Mr. Financial "Expert",

If I owe $200,000.00 on a mortgage and zero on my line of credit, how much do I owe in total? Exactly, I owe $200,000.00.

If I borrow $10,000.00 from my line of credit to apply to my mortgage as a lump-sum prepayment in order to cancel tens of thousands of interest dollars, how much do I owe in total now? Exactly, I still owe $200,000.00.

In other words, I have not gone into more debt; I have merely restructured my debt. If I have restructured my debt in this manner, it is either a good or a bad move, is it not? And that involves a simple mathematical calculation, correct?

There are no smoke and mirrors here; all we are doing is using leverage to cancel interest instead of paying our own money to our debt; it is really no big deal. Of course there are interest costs in the line of credit; I'm not stupid...this is simply a matter of doing a cost/benefit analysis.

Are you suggesting that we all should keep putting our money into our chequing accounts so the banks can use leverage with our money and lend our money out at exorbitant credit card interest rates? If the banks can use leverage, why can't we?

As far as the math goes, it is clearly more expensive to use the Money Merge Account that not to use the Money Merge Account system. So...what is your point? Do we not have many unnecessary items in our homes that have cost us more money than necessary?

You see, the Money Merge Account system is not for brainiacs who have proven the ability to consistently make prepayments to their debt. If you have been able to pay off debt on your own, then I say goody for you! Obviously you do not need a tool like the Money Merge Account system if you will continue to exercise the discipline and diligence necessary to keep making prepayments to your debt.

However, the Money Merge Account is for individuals who have had the ability and desire to prepay their mortgages in the past, but have simply not done so for whatever reason. For these individuals, would you rather they continue to stay on the bank's set amortization schedule and pay $228,271.02 in total interest costs over the life of their 30 year mortgage?

Would you prohibit these individuals from making a free choice to spend $3,500.00 of their own money (even if it is unnecessary) and purchase a financial monitoring and mentoring system that will keep them on track until their debt is paid in full in 7 years and 9 months, saving $175,232.42 in interest?

Now I am not suggesting that using the Money Merge Account will help them pay off their debt any faster than doing it on their own. All I am saying is that if I tell my next prospective Money Merge Account customer the following...

1) They can pay off their debt on their own, without MMA,
2) They can achieve just as fast debt payoff, and possibly faster without MMA,
3) They really do not need to spend $3,500.00 on MMA...

does this make me a bad person?

What if this prospective customer says, "I know Ken, that I can do this on my own, but I just feel I don't have the self-discipline to pay off my debt without some kind of accountability system. I want to spend $3,500.00 of my hard-earned money, because...

1) My finances will be monitored as long as I have debt,
2) I will receive financial mentoring and coaching on an ongoing basis,
3) I actually have a mortgage, a car loan, a student loan, a personal loan, a line of credit, a Visa card, a MasterCard, an American Express card, and a Sears card...all with balances. Now I suppose I could try to figure out to what debt I should be sending prepayments, taking into account the credit limits, balances owing, payment amounts, interest rates, and lengths of time to pay off each debt in full, but just the thought of doing this myself is simply overwhelming! I need help, and I am very willing to pay $3,500.00, just to give UFirst a chance,
4) My income sometimes varies from month to month, and I am pretty sure I will not stick to my own DIY plan in those months in which the sum of my total monthly expenses exceeds my net income for that month. With MMA, I will be able to simply trust and obey my monthly list of prompts and reminders, and everything will work out just fine.
5) My wife is expecting a raise in pay soon. It is not a big raise...she is simply switching from semi-monthly pay to bi-weekly, and she is getting a $10.00 increase per cheque. If I inform UFirst of this increase in income, they will be able to shave one entire year off my payoff time! I am pretty sure I will simply spend this increase if I attempt to do this on my own!
6) We need to purchase a new car sometime in the new year. I suppose I could figure out on my own what the true cost of this purchase will be, taking into account the amount of interest that I will not be able to send to debt if I purchase this car or that car. On the other hand, I think I will just buy the MMA system for $3,500.00, and UFirst will figure this out for me. This will actually save me a lot of time, and time is money, is it not?
7) I also want to start investing and saving for retirement soon. I guess I could try to discipline myself to do this on my own, but if I don't pay off my debt as soon as possible, it will delay the time that my debt is paid off; therefore, it will delay the time that I will be able to apply the same payment I have been giving to my bank and invest it instead. I just don't trust myself to do this on my own, so can you please take my $3,500.00 and let me purchase the MMA system?

No? Are you saying I cannot?

But Ken, I am well aware that I can pay off my debt on my own. I am well aware that the UFirst system may actually take longer to pay off my debt than if I did it myself. I am aware that $3,500.00 is a lot of money. I am also aware that there is only one type of math, 2+2 is always 4, and UFirst uses the same math that financial "experts" use. I am also aware that United First Financial as a company may go out of business some day...good grief, if banks, insurance companies, and possibly even whole nations can go belly-up, can we really count on any organization on this earth lasting for a long time anymore? I am also aware that some MMA users are not using their software anymore...what haven't I spent money on that isn't sitting unused in my basement or garage? I called UFirst about this, and they told me that if I ever stop using my MMA system, even for a long time, a quick call to client support to arrange a coaching session will get me back up and running in one hour or less...at any time in the future, and at no extra cost! I have also heard that United First Financial may be selling the company. I suppose if they end up selling the company, that means that someone else is purchasing the company. After all, I know of a couple of other companies that were sold in their infancy, only to be taken over by new owners who were able to grow that company much bigger and faster.

So Ken, despite all these factors, I still want to do business with you...here is my credit card for you to charge me $3,500.00 USD plus GST to activate my new Money Merge Account system.

Thank you.

"Cost?...You are suggesting the monthly cost is $33.00, but in the case of borrowing 10,000.00 at 10% APR to make a prepayment to a 30-year 6% APR, $200,000.00 mortgage, I use a monthly interest cost of $50.00. If a client has a discretionary income of $1,000.00, the $10,000.00 line of credit can be paid off in ten months. $50.00 X 10 = $500.00, so $500.00 is the COST of this little maneuver."

Borrowing $10k @ 10% to prepay 6% is a TERRIBLE idea if your discretionary income is only $1000, because you can't keep your balance at zero, thus you get your added interest cost. You are playing smoke and mirror games by focusing on the $40k+ in interest savings because you aren't posting the savings numbers for just plain prepayments.

Let's say, for the sake of argument, your interest on your extra loan was only $40 a month instead of $50. This helps you. Let's assume for the first ten months, the person has $1040 in discretionary income. This is enough to pay the $10k loan off in exactly 10 months. Applying $10k in the first month saves the MMAer $43,624.19. (not sure where you got your number).

now let's look at the prepayer....he makes an extra payment of $1040 each month for the first ten months....saving him $44,040.88 Wait, that's ~$700 worse than MMA!!! See, you've ignored the effect of the money that went to pay the extra loan. If that money were funneled to the mortgage instead of the second, higher interest debt, it would come out ahead.

But wait...there's MORE!!!! Let's count the $3500 fee too.....Instead of ~700 worse using your MMA...it's closer to $4300 worse using the MMA. And all this assumes only 10 months of prepayments. Each "10 month borrow-then-payback" MMA scheme makes the MMA even further behind.

Ken, give it up, the math is not in your favor. And as I've stated all over the internet, I have no "interest" in the finance industry. I am an engineer. I'm just someone, unlike you, with the ability to do math and a sense of ethics that keeps me from sitting idly by while people like you lie, cheat and steal. You are nothing short of a criminal and belong in jail.

And the UFF is not here to stay. They are dying. their sales have fallen off a cliff, 75% of the user base has stopped using the software, and they owners are desperate to sell the company to salvage any remaining equity before it goes belly up.

Enjoy your ride on the sinking ship. We call this years ago.
calvin

Ken, I've made a concerted effort to reduce the size of my comments to manageable bites that are focused, I am hoping you can do the same.

You pay interest for a 10 month loan (The $10K paid off over 10 months). All that matters is the balance sheet at the beginning and end of that 6 month period, cash flow in/out and interest paid over that short time.

You see, Ken, my approach is to shift time and numbers to the simplest example possible. I show how for an interest only loan, the math you use to express real interest rate falls apart. Where was your aha moment?

Now, Say I lend you $1000 for a month. I agree that if you pay it toward your mortgage, when still fresh, you will save nearly $5000 in interest. So far you'd agree. And if I charged you, say $50 for that one month loan, you'd still have saved nearly $5000, right? Good deal? That's 60% simple interest. This is exactly how you are explaining this, only in a more cumbersome, incomprehensible way.

If you want closure, Ken, look at this example, don't go off on a tangent, simile, or hyperbole. Just explain whether or not paying the $50 to borrow that $1000 is good or bad, there's no in between.

"Ken, Ken, Ken.... Please do the world a favour, and take a finance or accounting course on the present and future values of cash flows as well as leveraging at one of your local community colleges. "

Indeed.

Chansen, I do find it facinating that I started this thread over 2 years ago, and it has had over 275 posts in that time. Although this thread could have had less personal attacks from both sides....I am glad people will be able to find this thread and do a little research here when confronted with the decision to purchase the MMA or not.

By the way, we walked away completely from the MMA, and my friend no longer sells it.

DBG

RE: United First Financial - Money Merge Account

by chansen » Thu Aug 12, 2010 02:30:58 PM

How is it fascinating? It's just Ken ignoring the laundry list of arguments against UFirst, and being willfully ignorant of basic financial concepts like the time value of money, while promoting software that badly manages debt over time.

Arguing against such a position is tedious. This thread stopped being fascinating the moment it was created.