These comments are in response to a past story on mortgage merge accounts
Comment: I have enjoyed reading your columns, and have gleaned information from them, but when I read your response to concerning money-merge accounts, I was surprised. It is the typical response from those that haven’t done their research!
Did you know that when the 401(k) was first introduced, most analysts and columnists called it illegal and/or a scam? We get the same response from those that don’t understand the money-merge account. When you see it work, you will understand.
The money-merge account is as essential to one’s financial planning as a dashboard is to driving. The money-merge account is your financial dashboard. The initial response from most people is, “I can do this myself.”
This is true, and we had an engineer draft up the same analysis using excel spreadsheet. He said it took him six hours to create the same spreadsheet, and he thought he had one over the company! However, once he had everything entered into the spreadsheet, he realized he would have to do the same thing over the next month, all six plus hours of it.
The money-merge account does much more than accelerate your mortgage payment, it helps you manage your finances to the penny, and will track every penny you spend, adjusting your pay-off accordingly.
Of course, one has to be diligent in entering the data, but the retention rate of customers is over 95 percent.
Can you do it on your own? Of course they can! Will they? I’d bet $100 they won’t. People aren’t disciplined enough. The cost is absolutely nothing out of pocket. The initial fee of $3,500 comes out of your line of credit. It doesn’t change your income, cash flow, or lifestyle, but it does help you get out of debt in one-third to one-half of the time.
In my book, that is a win-win situation.
A: I’ve received a lot of mail on the MMAs, mostly from people who insist that they are life-changing for everyone. I’m not a PhD in Mathematics, but even I know that if you’re spending as much as you bring in, these loans won’t really do anything for you.
The truth is, if you prepay your mortgage by $1,000 to $2,000 per month, you’ll achieve great benefits and quickly reduce the amount you pay on your loan. And, if you apply the $3,500 cost of setting up the MMA on top of that, you’ll shave years of interest off your loan. And that’s the real point, isn’t it?