The program works if you are disciplined to follow it. It adapts to your situation and you can tweek it to do about anything you want in terms of debt reduction or cashflow.

One last thing it does is provide accountability for ones’ finances. You can be very detailed and track every dollar if you want, and the MMA will show you what each and every purchase will ultimately cost you. There are opportunity costs that many dont take the time to really think about before they purchase their 30k suv.

at least with the mma people can make educated decisions on their purchases

My HELOC is still 1% below my fixed mortgage rate. I have paid down $80K in principal with cash flow on my original $220K owed @4.75%. The concept has worked well for me, but is not for the impulsive purchaser (HELOC not for cars/boats/vacations-only a payoff tool). Simple spreadsheet or just a concept approach works fine if you understand the math.

My 401K has only garnered 4.7% per year averaged out since May 2008 with some really good months and some pretty rough months. Not the most savvy investor, but I am better off than many there.

Basically my HELOC has performed as well or slighly better than my 401K with little risk effect so far.

Joe has been quite helpful to me and others here.
Glad to see Joe is still checking in here as comments flow through.

Beyond this, there’s discussion around what happens when the HELOC is frozen, or an emergency puts you negative for a full year, etc.

The UFirst implementation is not optimum.
A) I can prove the HELOC shuffle ‘can’ work.
B) I can show the optimal draw down
C) I can show by UFirst agent’s own examples how they miss the numbers completely.

Math is my thing. I look at this and it’s literally 5th grade (4th if they’re smart). There is no real higher math involved.
I am not a know-it-all. I am failing at helping my own 5th grader in a number of subjects. But not math.

The spreadsheet is editable and it looks like someone had incorrectly changed that cell formula. I don’t know if Google Docs has the ability to lock individual cells, but it is working again.

However, there is a problem with the spreadsheet, somehow the equation at B4 got messed up. As far as I can see it should be, =-PMT(B$2/12;B$3;B1)
Once you correct B4 the rest of the spreadsheet works.
If someone could contact JimmyDaGeek and let him know of the problem that would be nice.

By definition, living at one’s means implies spending near one’s income level. Ideally, you live below your means, but don’t sacrifice your standard of living. The great thing about the MMA pitch (for agents) is their assumption that after all expenses, including Mortgage and Retirement savings, you still have $1000 in money to burn. Isn’t that the norm? Everyone is swimming in extra cash at month’s end, right?

I plan to get more educated on the process but not be overwhelmed regarding paying off the mortgage.

What’s missing here is that there’s good debt and bad debt. Sure, your house is bad debt since money comes out of your pocket, but if you didn’t have a mortgage, you’d be paying rent somewhere anyway. My advice- get rid of bad debt such as credit cards/ car pmts FIRST, then come up with a plan to disrupt the amortization schedule on your mortgage but NOT live below your means….

Thanks for the article….

It’s moreso proof that the MMA agents are flawed. Anyone with even a modicum of understand as to how this stuff works should pick out that mistake in a heartbeat. But they don’t…because they are sheep/idiots/liars. Take your pick.

To recent poster ray, yes, that issue has been discussed, here and elsewhere, you are correct. MMA benefits the bank far more than the homeowner. But the advertising copy “Help your bank by paying down your overpriced house to stay ahead of falling prices” did not get approved.

Matt’s downfall was simple. He claimed that he “used the MMA for 4 years” and that it was introduced to him in “April 2005″. Those statements from Matt are consistent. The problem, as Late2Game pointed out, is that the MMA didn’t even exist until 2006.

So, given that Matt has been lying to us about how long he was using the MMA, is he also lying about not being an agent? Probably, as only agents put that kind of effort into defending the MMA. Matt spent months here deflecting criticism and attacking the credibility of anyone who spoke out against the MMA. Now that his own credibility is shot, he’s gone. No surprise there.

When you pay down the mortgage, you don’t see any actual cash benefit until decades later, when the mortgage finally gets completely paid off. Your net worth grows, but you still have to make the entire monthly payment, even though you may be years ahead on the amortization table. The bank won’t let you skip a payment just because you’ve pre-paid the equivalent of many monthly payments. Your saving of multi-thousnds of dollars comes many years from now, from the payments that you don’t have to make.

An additional risk factor is that if things go pear-shaped for you and you get foreclosed, the bank takes your house and KEEPS all the extra payments you made. Nobody has mentioned this, either.

Whereas if you save/invest the extra payments into a separate “mortgage payoff account”, you can get the cash benefit of the interest earnings whenever you want it. If you ever want or need to skip a mortgage payment, no problem. Just take it out of your separate account and send that to the bank.

And if you ever get foreclosed, you get to keep the savings account. But you shouldn’t get foreclosed on, because quickly the savings account will be large enough so that you can make a lot of mortgage payments even if you lost your job.

So how about investing in preferred stocks, which are essentially bonds?

You could buy JPM (J P Morgan) cumulative preferreds which are yielding 7.4%. That’s a fixed, constant 7.4%, paid quarterly. Plus a built-in 12% capital gain.

Or BAC (Bank of America) cum pref’s yielding 9.2%.

Or HSBC cum pref’s yielding 8.2%.

Or HSBC floating rate cum pref’s yielding between 6.6% and 15.4%.

Not bad, compared to my mortgage rate of 4.875%.

I’d like to address the issue of the FIANCIAL merits pf paying down the mortgage vs. other alternatives. For example:
Putting that extra money into the stock market, like an S&P500 index fund.
Historical long-term average growth of the S&P is about 10.5%.
As of this date, the average compound annual growth rate (CAGR) of the S&P500 for the last 30 years is 7.5%. Including average dividends of 3%, that’s 10.5%. For the last 30 years.

For the last 20 years, the CAGR was 4.9%. Adding 3% dividends brings the return to 7.9%.

Note that these two periods both include the last 10 years, which were truly horrible. Last 10 years was a CAGR of about -4%. (Minus 4%, IOW, a loss). Adding 3% dividends brings it to a -1% loss.

Now, a mortgage is certainly a long-term vehicle, so it’s appropriate to compare mortgage rates (costs) with long-term stock market rates.

When I compare paying off a 6% mortgage vs. earning (average) 10.5% or 7.9% it seems like a no-brainer. 7.9% is more than 6%, so investing is superior to paying down the mortgage.

And eventually the (growing) investment account will meet the (decreasing) mortgage balance and you could pay off the mortgage in one fell swoop.

Why are you quiet all of a sudden after 7 or 8 months of banter?

I mentioned 5 or 6 LOC cycling software products I looked and and the cheapest of the bad choices I made.

Which bad product did you use for the last 4 years and why not be honest when you entered the blog?