Pay Off Mortgage Early


Most homeowners realize they will pay about twice the purchase price of their home on a traditional mortgage – a mortgage that will take about 30 years to pay off. Introducing a way to break that cycle of financial drain – the Money Merge Account. Developed by a team of financial experts with years of experience in the mortgage industry, the MMA rapidly reduces the principal of your mortgage, practically eliminating the interest from accruing on your loan. Your 30-year mortgage can now be paid off in about 8 to 11 years, with no change to your lifestyle or refinancing of your existing mortgage.

The Money Merge Account is not a bi-weekly payment or debt roll-down system. It’s an entirely new approach that gives homeowners flexibility with their money and complete financial freedom. A side-by-side comparison of a traditional mortgage repayment shows the savings potential using the MMA system. A 30-year, $136,000 mortgage at 5.25%, when paid through conventional monthly payments, will result in a 30-year total repayment of $270,784 nearly twice the cost of the home. The MMA program can repay the same mortgage in 11.3 years with a total repayment of $181,217. An incredible savings of $89,566 is realized on the same income, with the same mortgage, at the same interest rate, and without any changes to your standard of living. MMA is simply one of the fastest ways to repay a mortgage and be on your way to financial freedom.

How does it work? The Money Merge Account consists of three major components:

1. Your Existing Primary mortgage: The existing mortgage on your home is the foundation for the Money Merge Account.

2. An Advanced Line of Credit (ALOC) The MMA Program uses an advanced equity line of credit as a vehicle or a tool to drive the program. The equity line of credit must have the capacity to operate similarly to a primary checking account and be set up with an open-end interest calculation (rather than a closed-end interest calculation). Combined with the MMA’s web-based system, this creates a formula in which the money in your line of credit account generates an interest cancellation on your primary mortgage.

3. MMA software The online MMA system makes a connection between your bank account, the advanced line of credit, and your primary mortgage. Each time you deposit income into your account, it registers as a decrease to your mortgage balance. By decreasing your mortgage balance, you now lower the balance on which interest accrues. By decreasing the balance on which interest accrues, you increase the portion of your monthly payment which is credited toward your principal pay down. The algorithms in the proprietary MMA system are systematically programmed to create the highest interest savings possible in the least amount of time.

How can you do this too? Follow the steps below to achieve your wildest dreams and become mortgage and debt free.

1. Fill out the MMA application You must qualify for this program, we will perform a free analysis of your finances and see if we can help you become mortgage free. A full and complete application is step 1. We will contact you within 2 days with your results!

2. Activate your Money Merge Account We will help you in the necessary steps to get you setup and started.

3. Deposit Your Paycheck: Deposit your paycheck into your current checking and/or savings account. As soon as the funds clear, the amount you designate is transferred from your checking and/or savings account into your Money Merge Account managed line of credit. Because the line of credit is connected to your home, the money transferred from your checking and/or savings accounts decreases your mortgage balance, thus reducing the balance in which interest builds.

4. Pay Your Bills Throughout the month, you pay your bills using your Money Merge Account managed line of credit. With this account, money is immediately available through checks, debit cards, and ATMs. The amount left after bills have been paid remains against the balance of your mortgage until you need it, keeping your mortgage balance as low as possible, further reducing mortgage interest charges.

5. Follow the system Follow the promptings of the online MMA system to maximize your savings and pay your mortgage off as quickly as possible.* *Check with your United First Financial agent to see if the Money Merge Account is right for you.

Pay Off Mortgage Early

Did you know that on your typical 30-year mortgage, it takes approximately 21 years just to pay down less than half of the principal of your loan?

The Mortgage industry’s big secret has been kept away from the public since the Roosevelt administration. This little known secret has been taking you (and every other homeowner) for a very costly ride. Your 6% LOW INTEREST MORTGAGE IS REALLY costing you upwards of 60% or more!

You might be asking how you could possibly be paying THAT much without knowing it?

I is beause ALL mortgages are front end loaded, meaning you’re paying off the interest first. So during all of those first years, you aren’t paying down the principle. Instead, you’re buying the banker a new Mercedes.

Most of us realize how a mortgage works, and we are aware that we’re paying off the interest first, but no one has come out and spelled out exactly what affect that has on the total interest you end up paying. This withholding of information is the biggest “little white lie” in the banking world today.

Does this scare you at all? Hopefully it makes you a bit angry as well. We have been led to believe, that this is simply the way mortgages work, and that we have no choice. After all, who has the cash to just go out and pay cash for their home?

The banking industry is perfectly content with the way things are. Have you noticed that in virtually every town in the US, there seems to be a bank on every corner? Have you ever stopped to think that the banking industry is a business that earns money by using money? Your Money! What’s more of an eye opening statistic is that in just 5 years now, the bank has already made a great profit on the average mortgage.

Let’s look at a traditional 30 year fixed mortgage for $150,000 at 6%. Let’s take a good look at what is happening here:

(If you would like a visual, there are many online mortgage calculators that will allow you to print the amortization table and see these facts:)

Each year, the consumer pays $10,792 but a different portion of that total gets credited to Principal and to Interest. In the first year, $8950 of the payments goes straight to the lender and the remaining $1842 gets credited back to the consumer. Here are some other facts gleamed from this schedule:

- It takes 19 years before just half the monthly payment goes to Principal, the consumer ($5482 to Principal, $5309 to Interest).

- After 7 years, the consumer has paid $75,600 but only $15,541 goes to Principal.

- After 10 years, over 84% of the starting balance is still owed.

- After 21 years, half of the starting balance is still owed. At that point, the consumer will have paid $226,800 with only $75,000 of it going to Principal.

The numbers are heavily skewed in favor of the lender because they are designed to be. It’s due to something many consumers are familiar with, front-end loaded interest. Even though the monthly payment is fixed, each payment has a different contribution to Principal than Interest, and the contribution to Interest in the first years is much greater than in the last years. The result of this system is that the lender collects their interest first, up front!

Most consumers know that the interest on mortgage loans is front-end loaded, purposely stacked against them. But we also found that those same consumers, no matter how educated, as well as mortgage industry experts, do not realize that the front-end loaded interest completely throws off the fixed interest rate schedule.

Take a close look back at Year 1. The consumer pays $10,792 but only $1842 of it gets credited back to Principal. That’s all?

What if he sold his house after that first year? Would it seem like he paid a 6.0% rate? Even after 10 years, the consumer pays the lender almost $108,000 but less than $25,000 of that is going back to pay off the Principal. That’s not a 6.0% rate is it? The same holds true for even longer periods of time like 20 and 25 years. So if a 30-year fixed is kept for even 1 month less than 30 years, the rate consumers really wind up paying on it is higher. How much higher? The Effective Rate Formula reveals what the actual, real interest rate would be if a front-end loaded loan was kept for less than the entire 30-year term.

Holding on to that low 6.0% fixed-rate 30-year loan for 10 years results in paying an actual 43.48% interest rate. Keeping it for 7 years results in paying a staggering 68% interest rate to the lender. Keeping it for only 5 years results in the equivalent of a 102% rate. Holding it for 3 years yields an actual 182% rate and 1 year a 580% rate!

The numbers prove that the 30-year fixed rate mortgage is equivalent to a giant credit card with an astronomical APR. Millions upon millions of American consumers have this credit card, this massive liability, which serves as nothing but a giant mountain standing in the way of their financial hopes and dreams. The mountain’s bigger than Mount Everest yet remains invisible due to the deceptive nature of the game. And no matter how much more consumers earn at work and no matter how much their other investments return, it winds up being meaningless in the long run because that home loan, that 107% APR’d “credit card” is ******* all the wealth-building power out of them.”

Homeowners are being taken on a 30-year cab ride with the meter running. There must be a better way!

It’s a week night, and after a hard days work you have plopped down on the couch to watch a little t.v. You are making payments on your 30 Mortgage and the television commercials are telling you its time again to refinance. “Consolidate that Credit Card Debt”, “Lower Your Monthly Payments…..“Refinance NOW & Save”, “It’s Easy…No Closing Costs”. You’ve heard it all before, right?? Do you think its possible that the banking industry wants you to refinance so that they can sell you yet another frontloaded mortgage and leaving you with a principal to pay off in another 20 – 30 (and now even 40 & 50) years? Do you see how their game has them raking in that interest. They have the wonders of compound interest working FOR the bank, and against YOU the homeowner.

So how do we beat the banks at their own game? Well I believe that United First Financial is certainly taking a step in the right direction with their Money Merge Account.

The Money Merge Account (MMA) System is a work-around solution designed to achieve an accelerated pay down of home loan mortgages in the United States, and is provided by United First Financial.

It is based on the Current Account Mortgage concept based in the UK, Australia and Europe (see: http://en.wikipedia.org/wiki/The_One_account ) which results in homeowners paying less than half (on average) of the normal interest they would have paid on a normal amortization schedule. This concept has been around for over 10 years and 1/3 of all mortgages in these countrys are current account mortgages.

There is much misinformation about this concept among the American public… and especially by those who have not actually used the software themselves, and who do not understand the varying impacts of a closed end loan, versus an open-ended line of credit. Because this program achieves dramatic results, many are naturally skeptical. However this concept is based on math, and once the math is understood, the concept is understood.

In the US, banks make a huge amount of money off of “money float.” Consumers pay 6% for a mortgage, but get 2-3% for a savings account, and usually 0-1% interest for a checking account. That money sitting in the bank results in profits for the bank (money float), but the money is not being put to work efficiently for the account holder.

A CAM – Current Account Mortgage – puts the money float to work for the customer. One of the most heavily praised (and awarded) CAM mortgages is the One Account – now owned by the Royal Bank of Scotland, but started by Richard Branson of Virgin Airline fame.

The concept of the One Account / CAM is that the homeowner finances the home in an equity line of credit, deposits income into it and writes checks out of it. This puts every penny, not being spent, to work to keep the principle balance of the loan down, thus saving interest. In 1999, research from NOP Financial and David Goldreich of London Business School proved that eight out of every ten people in the UK with borrowings of more than £50,000 would be better off with a One Account mortgage.

This is NOT exactly how the Money Merge Account works… but because the exact concept of the Current Account Mortgage cannot be achieved in the US easily, due to US banking laws, The Money Merge Account utilizes two accounts to achieve the beneficial effects of the CAM. An opened ended line of credit is used, in conjunction with the closed ended primary mortgage, and a software program makes specific calculations based on the homeowner’s own financial variables.

The software that is part of the Money Merge Account is sophisticated… recalculating the variables with each new transaction recorded into the software (outgoing bills, dates and amounts paid, interest rates, income and dates received, etc.) The algorithm used for the software is designed to optimize the results of the Money Merge Account and, in effect, it learns from the client’s history, thus becoming even more efficient at producing targeted results.

The Money Merge account will pay off a 30 year mortgage (on average) in as little as 8 to 11 years, saving thousands in interest. This pay down is accomplished without the homeowner changing their lifestyle, or the way they spend their money. It often has no effect on the current cash flow at all… and accomplishes the acceleration of the mortgage by simply putting the homeowners money float to work FOR the homeowner, instead of for the bank.

Results will vary from client to client based on debts rolled into equity line account, discretionary income and individual money float. All clients are given a detailed financial analysis prior to purchasing the software and the company (United First Financial) provides a MONEY BACK GUARANTEE based on the software performing as good, or better, than the Analysis. When the Analysis shows the mortgage paid off… this also INCLUDES all debt included in the numbers. The Analysis also shows the total interest paid… which includes all interest on the Equity Line of Credit side as well. The program is about becoming debt free… not just mortgage free.

However, while the program will pay down a mortgage balance more quickly… the average life of a mortgage [in the USA] is just three to five years, estimates Douglas Duncan, chief economist at the Mortgage Bankers Association of America. [1] Other estimates place the historical average mortgage life at between five to seven years before it is either refinanced or paid for one reason or another, and/or before the owners sell the property.

For homeowners who do not keep their home or mortgage more than a few years, the Money Merge Account is simply an equity-building program. Since homes only appreciate through 2 methods… principal pay down or rising RE values. In slow market conditions, where homes are not appreciating, building equity through principle pay down is the only means of building equity at all.

This is important to know for people who financed their homes with Adjustable Rate Mortgages, or Negative Amortization mortgages. Right now, in the US there are two conditions coming together that are perilous for some homeowners… a slow real estate market in many areas (keeping real estate values flat, or even dropping in some cases), as well as a period when ARM’s are about to have a rate adjustment. Experts are predicting that 1 in 4 ARM’s will go into foreclosure.

In any market conditions… building equity faster means homeowners have more financial stability. If the homeowners income has not risen to where they can easily handle the interest rate increases for the ARM… the equity in the home can be tapped through several means (including the MMA – Money Merge Account), OR simply having more equity means the homeowner can move into their next home even faster.

Real estate investors are also finding the software tool invaluable in building a portfolio more quickly. Faster equity building in property 1, means that the property can be leveraged to get property 2 even faster. Savvy investors and financial planners are combining the power of the MMA with their investment know-how to build wealth much faster for themselves, and their clients.

For more information about this program… ask someone who actually OWNS the software to show you their results. Have an Analysis run on YOUR numbers, attend a product education seminar or webinar. See if the MMA is right for you… and if you can qualify.

This is not magic… it is math.

The truth lies in the bottom line.

Knowledge is power.

http://www.u1stFlorida.com

Special Thanks To The Asher Institute for Consumer Affairs for their Statistics

Pay Off Mortgage Early


Have you wondered why getting ahead seems so much harder for us than it did for our parent’s generation?

Is it because things simply cost so much more?…or maybe it’s because they were much better at making wise decisions with their money.

Or maybe, just maybe it’s because we are dying a slow financial death as interest slowly eats away at any additional money that was “ear marked” to save or invest.

Could it be that we are being bombarded with huge marketing campaigns that convince us to use our credit cards to buy far more than we need, and then refinance our homes to pay off that debt?

Thank goodness that many of us have 401k’s and pension plans in our workplace, because for many it’s the only money that is being saved at all, but since we can’t really get to those dollars until we are 59 ½, you have to wonder whether we’ll run out of money long before we ever have access.

If you look at what has happened to the average mortgage, the picture begins to reveal itself. Back in 1972 the median home price was under $30,000. So you can imagine how much the average mortgage was. But for the purpose of our analysis let’s say you financed $30,000 for 30 years. Even with higher interest rates the total interest paid on that 30 year loan was around $45,000.

Fast forward to 2007. The median home price is 211,000. If you financed the entire amount at 6.5% interest for 30 years, you would pay $269,117.00 in JUST INTEREST!

Now do you see where our money is going? Then if you add the fact that many of us our using our homes like giant ATM machines and ******* the equity out to pay off credit card debt, the picture looks even worse. Every time you get caught up in the refinance game, you are back to the starting line with a brand new mortgage where you are paying mainly interest for 21 years! Did you now that if you refinance in the first 5 years of that mortgage that you could be paying an effective interest rate over 100%?

So what can we do? We simply don’t have the cash to go out and buy our homes outright, we need to have a mortgage. The answer lies in getting that mortgage paid off as quickly as possible.

In Australia the One Account accomplishes this very nicely, and on average they are paying $100,000 less in interest than we do here in the U.S. Their mortgages simply look like our checking accounts, so they deposit their paychecks into their “One” account, and take advantage of the float on their money. We all know that there is almost always some money that sits in your checking account for a few days at least until you need to pay it out on an expense. In Australia that “money float” is working against the interest on your mortgage.

Here in the States the banking laws don’t permit us to utilize the “One Account” concept. But companies are now stepping forward with versions that will work here to accomplish the same goal.

NBC News in Las Vegas recently aired a report on a Valet working at a Strip Casino. By using one of these products

He will pay off his home in under 5 years, and save over $300,000 in interest! There is the money he needs to begin to turn the corner and put his money to work for his future.

If you would like to view this report, it’s available by clicking the link at the top of the post.

It’s time that we all begin to do our homework and take a good look at what is happening as the financial landscape slowly changes.

What worked in our parents generation, may simply no longer make sense for us. We need new awareness, and as we realize where the leaks are in our financial pipes, the repairs can begin.

We need to realize that a “new lower payment” may not be the answer, and that the wonderful refinance option with “no closing fees”, may cost us more than we could ever imagine.

We need to open our minds to new ways, and thoroughly investigate all of our options. Our futures depend on it!

Pay Off Mortgage Early

One of our constant goals is to save our pennies. Have some more cash in the bank and in our pockets after the bills and rent are paid so we can enjoy it more.

Here are some handy tips to keep more cash in your pocket and less going out on bills.

Cut down on unnecessary expenses. A lot of us have cable TV, some even have satellite. But in reality, the overwhelming average person only watches perhaps 21 hours of TV a week, and of those 21 hours, most of them are spent on two major channels. So, for a money-saving tip – reduce your cable or satellite subscription package. Cut out the extra channels you don’t even watch. The average cable bill in the US will full service is upwards of $72 – but basic cable normally only costs around $24. How many people rally watch all the extra channels enough to justify spending $48 a month in extra expenses? That’s 12 Frappuccinos.

Another wasteful area is eating out all the time. Especially if you work in a big office building. Quite commonly you’ll go to the cafeteria or go to the lunch place around the block and spend anywhere from $4 – $16 a weekday on lunch alone.

For under $16 I’ll tell you how to make a week’s worth of lunches that’ll knock your taste buds out and make your pocketbook happy. You go and buy a pack of pita bread or soft burrito rounds, those big ones in the bulk section. A bag of 12 normally costs about $4. Now, buy some pre-cooked chicken or ham($4), a bag of tossed salad or coleslaw($3), and some condiments ($4). Chop up the meat and split it into 5 equal sections. Freeze all of them in baggies until you need them for lunch. Make up the salad or coleslaw as needed, keeping the remainder in the fridge as it will be good for a week in the cold. Add some sauces like mayo or bbq and you’ll be set. A lunch wrap that’s as good if not better than what you’d buy in a shop and it will save you enough to easily get another 5 frappuccinos that week.

Also – how many people have more than one bank account? I know I do. If you are only using them occasionally, and not as they are being used, then close them. Most bank account have monthly interest and bank charges that can be anywhere from $5 to $25 a month. Closing or merging account can save you a bundle, not only in bank fees but in stress as you don’t have to worry about all those accounts any more. And for every $4 you save, another Frappuccino gets added to your balance.

So to recap – if you want to have more Starbucks coffee, and to be honest, who doesn’t. The only real way is to save more money to spend it on Starbucks coffee. By following these few tips you can save enough to have a Frap every working day for a month, easy. That’s 20 Fraps or $100 – pretty cool, huh?

Pay Off Mortgage Early

It is no surprise that most teenagers have issues with money in today’s world of instant gratification. Usually, as soon as they get money, they spend it. Most don’t have the foresight to plan for anything. They seem that video game or that pair of shoes and have to have it that moment. A lot of adults have problems with impulsive buying as well. But maybe educating the younger generations about money management and financial issues will not only benefit them but us as well. If you haven’t taught your teenager yet about the below list, you might want to get started as soon as possible.



Credit: It is one of those things that is a love-hate relationship. Although it is good to have credit in order to buy a house and so on, many people get a little out of control and start drowning in debt—debt that they can’t pay. Some parents even set their teenagers up with a credit card—with a small credit limit. Not only will this build their credit, but it should teach the teenager responsibility.



 



Banking: Making sure your teenager has banking and a savings account is crucial. This will help them manage their money and build credibility with the bank. It is also a good idea to set them up with direct deposit if they work.



 



Mortgage: Paying a mortgage is a huge responsibility. Granted, as teenagers they won’t have mortgages at their age, but it is never too early to learn about it. Let your teenagers go with you step by step through the payment process and especially if you have a money merge account. It is important for them to know that there are ways to pay off your mortgage faster than just thirty years.

Pay Off Mortgage Early

Over the past several years homeowners are facing the reality that their mortgage really is their biggest debt. With home values shooting up, homeowners have tapped into this equity to facilitate a more appealing lifestyle, ignoring what this will do to their financial position in the long run. Now with lenders closing shop left and right, mortgage originators dropping like flies and “creative” loan programs beginning to rear their ugly heads, there will be more demand to find solutions to foreclosures.

One of the programs that are beginning to surface is the concept of the Money Merge Account. The concept behind this plan is not new, and involves paying extra money to principal to cancel interest. Many homeowners do this now to a certain extent. With the bi-weekly payment plan a homeowner pay’s two ½ payments each month. With this they can expect to pay one extra mortgage payment per year.

In order to build equity more rapidly, you must have a lender that will immediately apply each 1/2 monthly payment upon receipt. If the lender waits until the second payment has been received before crediting the loan, you won’t see the benefits. When worked properly, this is a decent plan and is effective in reducing your amortization schedule. One of the downsides of this is that there is no built-in plan to come up with the extra money.

Another method to paying off mortgage and other debt is the debt roll-down. The idea here is to set aside a certain amount for debt repayment and continue to maintain the total monthly amount you pay in debt reduction even after the first debt is paid off. You would then target each debt you have in the order of highest interest rate. This is effective, requires a lot of discipline but does not employ the concept of interest arbitrage, or interest cancellation.

The Money Merge Account is neither a bi-weekly or debt roll down. With the Money Merge Account, the homeowner would set up a specific type of HELOC (Home Equity Line Of Credit) that would be open-ended. In this case the interest would be charged on the average daily balance rather than month-end principal balance and would act as a primary checking account allowing monies to be deposited and withdrawn using checks, debit or transfers. Rather than using a standard checking or savings account where your money sits, waiting to be spent and doing nothing for you; you would use the functionality of the HELOC to compress the principal balance in which the interest is calculated (on an average daily balance).

Taking into consideration the structure and interest rates of the HELOC and the first mortgage, your income and expenses; the Money Merge Account software would prompt you periodically to make extra payments to your first mortgage. This prompt would be a specific dollar amount, to the penny and applied on a specific date as to maximize interest cancellation. Once the payment is made, the balance owed on the HELOC would go up, you would then deposit your paycheck back into the HELOC driving the average daily balance and interest charges back down canceling interest until it’s time to pay expenses again.

By using this method, you are using a portion of your discretionary income which includes the offset interest from the HELOC. The extra payments to your first mortgage would not necessarily be applied every month; it would depend on your particular cash flow situation. With this method, the average homeowner will pay off their home in as little to ½ to 1/3 the time.

So with the cooling real estate market and ever increasing demand for solutions to mortgage debt, many ideas will emerge, as necessity is truly the mother of invention. Whereas the concept of interest cancellation is not new, the systematic approach of the Money Merge Account software definitely is and worth a second look as a viable option.

I hope you have found this article informative and interesting. Feel free to contact me if you have questions.

-Greg Campbell

Pay Off Mortgage Early

A mortgage payment represents one of the greatest expenses of the typical American citizen. But mortgages never seem to get paid off (even though we know it happens).

The reason for the seemingly endless duration of a mortgage note is that a mortgage payment is much more about interest on the loan than it is about the loan amount, or “principal”.

Until the final years of a mortgage, most of your monthly payment to the lender goes to finance the interest payments on the principal amount, rather than pay down that principal. A mortgage of $100,000 principal with an 8% interest rate, if the note is 30 years long and all payments are made on time, will cost you about $300,000.

But there is a way to save both money and stressful time on your mortgage in the long run: pay it off early.

In a mortgage contract, interest accrues to the outstanding principal balance with every passing day. Therefore, the faster you pay down that principal, the less total money you need to pay in the long run.

It is because of this reason that many people who can afford to do so opt for a 15 year mortgage instead of the standard 30 year. Although their monthly payments, given the same interest rate and loan amount, are higher with the 15 year, they realize that in the long run they save a lot of money because the principal is paid down twice as fast.

There is a way, however, to pay off a mortgage even sooner than within 15 years, and thus save yourself even more money in the long run.

One method that some homeowners use is the “bi-monthly payment” plan. With this voluntary, but sometimes lender-facilitated, payment plan, one-half of a month’s mortgage payment is made every two weeks. Not only does this come out to an additional month’s payment per year, the accretion of interest is sliced in half every month by the timeliness of the payments. This results in a 15-year mortgage note being paid off in about 11 years and a 30-year mortgage note being paid off in about 22 years.

But, it is possible to pay off a mortgage even sooner–in as little as eight years. (Remember, the faster the mortgage principal is paid off, the more money that’s saved.) The way to do this is to use what’s called a Money Merge account. With a Money Merge account, your mortgage account doubles as your checking account–so, your paychecks “automagically” go toward paying down your mortgage principal.

Pay Off Mortgage Early
I seriously think Bob and Suze need to put on the boxing gloves step into the ring together and have it out…

Here you have two extremely popular mainstream, “Pop culture” financial advisor, icons spouting their own versions of “financial freedom” and the “truth about debt”.

They both sit at the opposite ends of the spectrum in their views on money, Debt and investments…

So who is right?…Who is wrong?

Personally I dislike them both….More accurately I dislike both of their methods and advice….But if I had to pick, I probably would sit on the “more conservative” side and go the Suze Orman route.

Although I do think Suze is, most of the time, just spouting a bunch of “good sounding” generalities that seem like common sense.

I think Suze speaks with her certainty, and forceful confidence more as a selling point for all the “Kool-aid” drinkers out there that listens and follows anyone that speaks with enough confidence…

Don’t get me wrong, some of her advice is sound and just plain common sense, but I just think sometimes she speaks about things that she really has little knowledge of especially when it comes to Mortgages and loan programs, and indices that certain loans may be tied to and why that is important….

Suze over compensates and errors on the side of caution to protect her reputation and the “kool-aid” drinkers she markets her wares to…. I can understand this approach, but this does not mean I agree with her advice even 25% of the time.

I can appreciate Suze Ormans tendency to be a little financially conservative but sometimes I think she participates in a little “Financial Fear Mongering” on topics she obviously knows “little” about,…specifically Mortgages.

Robert Kiyosaki on the other hand almost borders on “financial reckless abandon”. He advocates the approach to run up debt to increase cash flow and to use the liquidity from running up debt to make investments.

Mr. Kiyosaki is a believer in the mindset, which a lot of your more traditional Financial planners out there share, that you should always have a mortgage on your home and be taking the tax benefits…

Robert also seems to like the idea of taking an “Option Arm” program and doing the minimum “Neg Am” payment and investing the difference of what you would be paying towards a more traditional type 30 year fixed mortgage.

I can’t even begin to express how much I shudder at the advice Mr. Kiyosaki gives…What is scary is a lot of “mainstream” financial planners agree with him.

Me, well,…I tend to fall more in the middle between Suze and Robert. I believe most people probably fall in this “middle” area.

First, I think you should always focus on completely paying off the mortgage on your primary residence as quickly as you possibly can. Forget about the tax benefits that come from having a Mortgage…Why the heck would you pay a bunch of interest up-front, just so you can write off the interest on your taxes and hope you can get a bigger tax return at the end of the year?…Just does not make sense to me…Why not just remove this complete waste of time from the equation all together and just pay off your mortgage as quickly as you can….Not too mention that the IRS can decide to pull any tax benefit on owning a home at anytime…I just don’t like putting that control in someone else’s hands….How about you?

Second, Why the heck would you take a “Neg Am” mortgage, on your primary residence, make the minimum payment and invest the difference?…Now if you have the strict discipline to be able to invest the difference this might actually work, but at best, the problem still remains, that you are still gambling on the future performance of what the market is going to do that you are investing in.

Do you realize that by “Contract” the most a financial planner can guarantee as a return on your money is 3%? Now do the math, when it comes to doing a “Neg Am” payment and investing the difference and see if this approach is really that good of an idea.

Personally I like to have control and NOT put my “faith” in anything, if I don’t have to, especially when it comes to money and the future security to my family and me…But thats just me…I’ve been called a ‘Control Freak” more than a few times in my life.

This is why I like the “Money Merge Account” (MMA) method of paying off your first mortgage as quickly as possible without affecting your monthly cash flow.

What is an MMA?

The Money Merge Account consists of three major components:

1. Your Existing Primary mortgage

The existing mortgage on your home is the foundation for the Money Merge Account.

2. An Advanced Line of Credit (ALOC same thing as a 2nd position Home equity line of Credit)

The MMA Program uses an advanced equity line of credit as a vehicle or a tool to drive the program. The equity line of credit must have the capacity to operate similar to a primary checking account and be set up with an open-end interest calculation vs. a closed-end interest calculation. Combined with the MMA web-based system, this creates a formula in which the money in your line of credit account generates an interest cancellation on your primary mortgage.

3. MMA software

The online MMA system makes a connection between your bank account, the advanced line of credit and your primary mortgage. Each time you deposit income into your account, it registers as a decrease to your mortgage balance. By decreasing your mortgage balance you now lower the balance in which interest accrues. By decreasing the balance in which interest accrues, you increase the portion of your monthly payment which is credited toward your principal pay down. The algorithms in the proprietary MMA system are systematically programmed to create the highest interest savings possible in the least amount of time.

In short, an MMA is basically getting a smaller second position “Home Equity Line Of Credit” or HELOC on your home and use this HELOC as you would use your regular checking account by cycling your income through it (direct deposits and what not). Since HELOCs use “open ended” interest calculations you can use this to your advantage by canceling the interest on the “Closed-ended” interest calculations on your current “first” mortgage and making some accelerated and “compounded” principle pay-downs in the process.

A HELOCs payment is also based on an “Interest Only” calculation on what ever the average daily balance is of the Line of credit. It is assumed if you are cycling your income through this line of credit not only is the HELOC payment automatically made for you but the amount of interest that is charged is minimal because you are constantly keeping the total drawn amount on the line at a very low level. Compare this concept to a fixed second mortgage and see what you come up with…Go ahead do the math.

You always will have access to your income and cash flow based on the HELOC being an open ended line of Credit that you can draw upon at anytime.

You get the best of both worlds using this approach. You get to pay off the biggest debt you will probably ever have (your home) in less than half the time and you still have access to your cash to invest as you would like to so you do not miss any great investment opportunity that may come along.

Using a “Money Merge Account” (MMA) as a financial planning tool gives you back control. It is a known as opposed to an unknown, which is the territory that most “traditional” Financial planners roam.

Now using the MMA concept does take some discipline. It does you NO justice to constantly run up the MMA account on frivolous purchases that you would not normally make if you did not have the MMA.

Your Home is NOT a credit card and an MMA should NOT be the vehicle to treat your home like a credit card. But, with this being said, I challenge you to compare this level of discipline that is required to effectively use the MMA against the discipline that is required using a “Neg am” option ARM type payment loan and investing the difference which is spouted by Mr. Kiyosaki and some of your more main stream financial planners.

Now, because I personally like the MMA concept this is where I diverge from not only from Robert Kiyosaki but Suze Orman as well.

Hell, I remember Suze Orman spouting here usual “fear mongering” about the dangers of “Home Equity Lines of Credit” HELOCs saying that if you miss a payment on a HELOC you will lose your home. Jeesh, that’s a little bit of an exaggeration.

The problem people run into when they use HELOCs is that they tend to treat them like a credit card secured by their home. This is the absolute wrong approach and is nothing what the MMA method advocates.

So back to the original question…Who is right who is wrong?…

If you’d ask me I would say Both Robert and Suze are wrong because they are not understanding the “wide scope” implication of what they preach to the masses.

I would also say there are certain financial concepts that both are unaware of that they might actually both agree with.

Not everyone will fit into any “cookie cutter” financial plan. A lot of it comes down to style, comfort levels, discipline, and personal financial tolerance…in essence “Different Strokes for Different Folks…”

My only point is not to believe anyone “blindly” just because they may be popular or speak with confidence. Investigate for yourself what may be the BEST course of action for you based on your own personal financial situation and goals…

In the mean time I will see if I can arrange that Celebrity death match between Robert and Suze, You interested in buying tickets to watch?…..

Pay Off Mortgage Early
It was not very long ago that when a couple were married their finances became merged and everything was as one. Today, many people are opting to keep things separated for a variety of valid reasons.

Because of the way society has unfolded, our finances have become extremely complicated with a large amount of debts, child support, and loans that they may have gotten prior to marriage. It really depends on the situation of the couple as to rather a separate checking account will work or not.

The first thing that needs to be done is that both of you will need to sit at the table and discuss all options that are available to you, be honest and open about your financial wellbeing and make an informed and mutual decision. Traditionally, couples open a checking account of the joint type, this is best way of merging finances together on both sides. However, it is important that both parties be responsible for the comings and goings into that joint account. This will require consistent communication, saving receipts, and updating the register constantly, this will provide the other person with knowledge of what has been happening. This may not be the best option for those who have troubles with keeping receipts or keeping track of checks written.

Another option that may be available to couples is having two separate accounts and one joint. There are a variety of excellent aspects of this scenario, you make an agreement about the amount that each person should place into the joint account each week, bi-weekly, or monthly and this should go towards household expenses. This allows each side to keep their own account, have their own financial freedom, and yet still be contributing to the rest of the household needs. You will both need to sit down and discuss how much should be placed into the joint account, to do this first begin by creating a budget that specifically outlines all of the household expenses on a monthly basis. If each of you earn pretty close to the same amount of money each month, you both should put half in each month.

This should include a savings account for saving for any type of goals you have such as children education, vacations, or other types of financial goals. With the separate account, these should be used to pay off all pre-existing debts you may have from prior to the marriage.