Ok sir.

I apologize for the name calling. I just wanted to see what you were made of. In fact there seems to be integrity in your tone.

I am just about to post back to the gentleman who pointed out try calculating the $815/mo discretionary as extra monthly payments to the mortgage and all other debt. I did that and feel quite stupid that I didn't do that at first. I've had my rolldown software for years and I'm pretty good and running the numbers 7 ways until Sunday. For whatever reason - I didn't. But now I did - and I discovered how to save my friend the $3,500 and $3,000 in interest costs plus an additional 0.3 years in time.

But that's why I posted here - as I said - I would gladly eat crow. Mmmm...tasty!

I can refer professionals to the company who sells the software that I use for the debt roll down. It makes an AWESOME presentation PDF file. 7 pages complete with color graphs, charts, and number explanations. You can also have the software build amortization charts for interest paid by month, payments by month, and balances by month. I tell my clients to use the printout and mark each month with a red X - just like kids getting ready for the days until school. They will see their debt turn into retirement.

MMA people - I don't disrespect you - that is if you are NOT aware of the FREE alternatives to the MMA concept. However - if you are aware of the alternatives, and you know that you can get software analysis printouts with COMPLETE plans for help with discipline - but you still push the $3500 software as NECESSARY - then I hold you in disregard as an untrustworthy person. Let me put it this way - I would consider myself a fruad, fake, phony, and liar if I didn't post this now that I "saw the light." (And still kicking myself for being so stupid.)

Anyway - see the other post (should be right after this) I am copying the e-mail that I sent to me UFF-MMA upline agent. If you're interested in replies - I'll put them up.

Can anyone comment on this (only assuming a mortgage loan and not a huge debt load):

The software program costs $3500. Lets say the mortgage payment is $2000 a month. Can you not achieve the same benefit (or do better) by making an upfront principal payment of $1500 towards the loan instead?

A. With the software (assuming a 30 day HELOC grace period - for exposition), these are the times when the money goes out of your pocket.
Jul 1 - $3500 for the software
Aug 1 - $2000
Sep 1- $2000... and so on


B. By yourself, mortage payments starting with Aug 1 will have a larger principal contribution and a smaller interest contribution as compared to Option A, because you have brought down the principal amount upfront.
Jul 1 - Pay $1500 (towards principal) + $2000 (mortgage payment)
Aug 1 - $2000 (interest portion is lower than in Option A)
Sep 1 - $2000...(interest portion is lower than in Option A)...

You do better by yourself rather than buying the software package.

Even if you want to use a HELOC, can you not set up a simple calendar of payments in an Excel spreadsheet? Use the HELOC to pay the monthly mortage payment as early as possible and pay the HELOC balance just before the due date to avoid interest charges. Just like one would use any credit card, if one is running short of cash or wants to arbitrage in the meantime.

Any thoughts?

drosengarden said:Mr. Suck,

The problem a lot of times with these forums and issues of "hot debate" is that people don't take time to realize that other people might not exactly understand the concept completely. More patience should be shown in helping others to understand if you have hardcore evidence and facts (not hearsay) to the contrary. Some people, however, just feel that others of less understanding don't deserve any treatment other than berating. With that being said - if my tone was berating then I suppose that I deserve your breatement. Let it be clear, however, that regardless of how my tone was interpreted through the written word - my 100% intention was to prove wrong OR be proven wrong. I did have a presupposition coming in to this forum (obviously) but it was not with the intention of holding to it should the presupposition prove fatal.

In fact - as I promised I would - I am eating crow. And very much thanks to your reply using simple numbers and actual method concept. The truth be told is that I feel stupid for not running my calculator in the manner you have proposed before spouting off - but I didn't and therefore thought I saw a new business opportunity for my existing mortgage business.

With all that being said - he is a copy of the e-mail that I just sent to my UFF upline:
--------------------------------
Bad news Mercedez...

I've been sniffing around the Internet and forums, etc. about paying off mortgages early. I am in deep research to find if my clients and friends would be able to find any tools that are cheaper priced or better yet free vs. the MMA software.

Well - in one particular discussion - a gentleman pointed out the easy and the obvious. The friend I did the analysis for - he has $815/month discretionary income. Using the MMA tool and including the the $3,500 software fee - my friend would be debt free in 7.3 years with just over $25,000 interest paid.

However - using the most simple concept of paying the extra $815/month into his all his debts in the most dollar wise fashion - and then continue to roll down every month on a regular basis - my debt rolldown software shows that he will be debt free in 7.0 years and spend just a little over $22,000 interest paid.

Where does the extra time and extra interest come from? Well - it would be the fact that my friend would have borrowed $3,500 on the software and converted lower interest rate student loans into a higher interest rate HELOC.

I hate to say this - but the MMA is nothing but a bunch of smoke and mirrors covering nothing more than the good old fashioned frugal principle of making extra payments to your mortgage every month.

Granted - this whole interaction has shown me a more powerful use of the HELOC. Instead of leaving discretionary in the checking/savings - dump ALL left over cash in your mortgage. BUT MAKE SURE you have a HELOC because if you ever needed to get that cash quickly in the event of an emergency, crisis, or other quick need - you would need to pull that money (equity) back out. Hence the ONLY need for the HELOC. (Now other people would say to invest the discretionay in an account that was earning at LEAST more than the after tax adjusted rate of interest on the money borrowed in your mortgage - this would earn you more principle and "pay off" everything much more quickly - but for practical purposes and considering some people are afraid or don't know where to turn for investing - paying off the house in quickest fashion is at least a guaranteed thing.)

I'll be open to other scenarios that you could let me run on both my MMA login and my personal debt roll-down software. I'd like to see if you still believe the MMA would work better than just extra principle payments - then I need to see the numbers for myself by running them myself. But I don't believe this is going to be the case. It would appear there are no true algorithms of any type of ultra-sophisticated means. Just the simple concept of paying extra principle every month.

Please let me know - and I hope your family situation is doing better.

Sincerely,

quoted for preservation to remove the personal info. You don't want that in there.

drosengarden said:Granted - this whole interaction has shown me a more powerful use of the HELOC. Instead of leaving discretionary in the checking/savings - dump ALL left over cash in your mortgage.

One minor nit, depends upon the mortgage rate and taxes. Best nationally avalible savings account rate is currently 6.0% APR. So depending upon your mortgage rate and taxes you might be better off putting your money there instead of paying down your mortgage.

That wsa partially my fault. My contact info was in there and that's a no-no. So the moderator delted the entire thread along with my e-mail by mistake.

He's put it back - of course.

Sorry to set off the chain reaction.

drosengarden said:Granted - this whole interaction has shown me a more powerful use of the HELOC. Instead of leaving discretionary in the checking/savings - dump ALL left over cash in your mortgage. BUT MAKE SURE you have a HELOC because if you ever needed to get that cash quickly in the event of an emergency, crisis, or other quick need - you would need to pull that money (equity) back out. Hence the ONLY need for the HELOC.You've still got this wrong. If you put ALL "left over" cash in your good ol' thirty year fixed rate mortgage and then count on using your HELOC when you need the money, you are going to be in a real mess when the rate on your variable HELOC has risen up to 8, 9, 10% or more and your partially paid off first mortgage was only in the 5 to 6% range. The only way the rapid payoff would work is if you already had a big HELOC balance or you were willing to expose yourself to the interest rate risk by moving your entire mortgage to a HELOC arrangement.

I STILL think paying off the house is a bad idea.

dcwilbur said:drosengarden said:Granted - this whole interaction has shown me a more powerful use of the HELOC. Instead of leaving discretionary in the checking/savings - dump ALL left over cash in your mortgage. BUT MAKE SURE you have a HELOC because if you ever needed to get that cash quickly in the event of an emergency, crisis, or other quick need - you would need to pull that money (equity) back out. Hence the ONLY need for the HELOC.You've still got this wrong. If you put ALL "left over" cash in your good ol' thirty year fixed rate mortgage and then count on using your HELOC when you need the money, you are going to be in a real mess when the rate on your variable HELOC has risen up to 8, 9, 10% or more and your partially paid off first mortgage was only in the 5 to 6% range. The only way the rapid payoff would work is if you already had a big HELOC balance or you were willing to expose yourself to the interest rate risk by moving your entire mortgage to a HELOC arrangement.

I STILL think paying off the house is a bad idea.

While I don't neccesarily agree with a pay program no one ever got rich by not paying off their house or better said having a house payment.. Personally I would love to not have a house payment. Less stress, less risk, more money going to me.

mikef07 said:While I don't neccesarily agree with a pay program no one ever got rich by not paying off their house or better said having a house payment.. Personally I would love to not have a house payment. Less stress, less risk, more money going to me.Some people get it, some people don't.

HINT: OPM

I generally get the concept of amortized vs simple interest and leveraging float, etc. I also understand that the software automatically calculates what you would save and the time to payoff, etc.

My questions:
1. Is it possible to setup your mortgage the same way (MMA, HELOC, etc.) and do the exact same steps without the software?

2. If it is, wouldn't the lenders charge you the same interest if you did the exact same thing regardless of whether you have the software or not?

My point is if I do the exact same thing, I don't need a software to tell me exactly when I will pay off my mortgage. The lender should tell me when to stop and won't accept any more money from me just because I didn't have the software to tell me that I'm already paid off.

drosengarden said:Mr Monky,
Finally - the software - this can not be done with out the software. For several reasons:

First - To calculate the timing of this mortgage "acceleration" considering the factors of closed interest, open interest, forecasted costs, etc., etc - would be impossible to do without the sophisticated calculator. (If you believe that you can do it SIMPLY for the AVERAGE lay person - then show me the goods)

Next - The fact of LIFE. Life has it's unplanned changes - including changes in income and changes in expenses. One changes happen - again you would need to software to recalculate what this means before the software could direct you to make the adjusted payments in order to keep the program working and to keep you afloat in your daily living expenses.

To me this isn't that hard to see (but I'm a numbers guy who actually works in the mortgage business - I'm not the average lay person like my customers.) However what I see here is that most people don't understand the concept but thing that they do - then they bash it and cite off things like Quicken, and bi-weekly payments, or extra payments per month (like my friend here) and actually think that it's just as good if not better than using a HIGHLY sophisticated interest calculating software.

By all means - I understand that some people choke at $3500 - and I also understand that as everybody finally wakes up and gets it in the US (like they have done in Austraila and U.K. for decades now) then bank and companies will offer this product for less, and less, and less - until it eventually becomes a free tool that you get as a courtesy just to open your HELOC with "our bank."