Money Merge Account/One Account
March 2, 2007 – 10:34 amI stumbled upon the article in Wikipedia today about Money Merge Accounts.
While I completely agree that paying for a software program to “manage” this appalling, consumers searching for info on how they can do this for themselves will find the Wikipedia article and not useful information about how this can be accomplished.
I love the idea of this account. In fact my wife and I will be doing it here shortly at my CU to start testing, but we need to educate our members and the general public how this works!
For those of you new to this concept, the basic premise is that you dump your entire mortgage into a line of credit. You also combine all of your checking and savings accounts into this line. So when you get paid, your direct deposit goes directly into your line, immediately lowering your principal balance. As you pay your bills throughout the month, you withdraw money from you line to fulfill those needs.
Over time, you will pay dramatically less interest on your line because your average daily balance of your line is much lower that what it normally would be. Would you rather receive 2% interest on your money market account or “earn” 7% interest having the money in your line instead?
It takes a very fiscally responsible person to do their finances like this. This type of program will only work if you are a net saver.
I encourage anyone looking to do something like this to visit The One Account. If you can get over the whole pounds thing, you can use the calculator and figure out how fast you’ll pay off your house. (My wife and I will do it in 12 years.)
And for those in the CU industry: we need to go change the Wikipedia article to have it actually explain the concept behind The One Account/Money Merge Account and not scare off consumers. Once (if) CU’s can really start adopting this product, we really need to make sure that we can educate the public and our members about the true benefits of this program.
25 Responses to “Money Merge Account/One Account”
That was simply the most useless Wikipedia entry in history.
I also love the concept of this product and hope it’s offered at my CU soon. My wife and I will be purchasing our first home in the next few years (market-dependent, of course) and would like to use a product like this.
By metrocard on Mar 2, 2007
Robbie, I think Envision Financial’s Redfrog product is an example of this account. Check it out at http://www.redfrog.ca/ . The credit union is based in Langley, British Columbia.
By Mary Arnold on Mar 5, 2007
Yes Mary, you’re right! I was racking my brain trying to figure out who else was providing it and I knew someone in Canada and and Pioneer Trust or something like that in California is doing something like this too! Thanks for reading my mind!
By Robbie Wright on Mar 5, 2007
FYI, the “Money Merge Account” Wikipedia Article was deleted - in fact multiple times - because:
- It was an advertisement (even had pricing)
- Almost completely original research
- Written in an un-encyclopedic manner
- Kind of did not make sense (on one hand discussed a Mortgage type, on the other hand discussed a software package to manipulate multiple mortgages)
- Someone was removing the fact a few of us tagged it as {{ad}}, {{cleanup}}, etc., and our comments on cleaning the article up on the “Talk” page as well.
- At one point claimed to be submitted by someone who sold the product.
- In fact largely a copyright violation from another source.
- The accounts/IP addresses involved primarily worked on this article only (along with mentioning the firm and/or their email address in a few other places; all of which should not have been used).
The activity log for the article is available here.
Without using software to do this, the general concept of this account does exist in the US. See this Bankrate article for two firms that offer such loans. In the UK, a similar type of loan is known as an Offset mortgage.
Sadly, the fact this article made it this far shows how much power Wikipedia has. (The old version is still cached in Google as of this writing.) If I had realized the extent of the problems with this article when I encountered it myself the first time, I would have tried to escalate the matter earlier instead trying to figure out why they thought their software was notable and novel, and trying to reason with them to make it more generic and appropriate.
(Posting Anonymously for obvious reasons.)
By Anonymous on Mar 13, 2007
I’m not surprised the Wikipedia article was deleted. Even if it wasn’t deleted by Wikipedia itself, I would bet money the owners of United First Financial would have requested it be taken down, due to the very same facts ‘Anon’, listed in his/her comment.
However, this blog article is not quite correct either. I know and understand how this program works, in detail. As a current client USING this Program, I would encourage families to invest in themselves, and research before trying this program. Ask about, talk to a professional and if you’re looking to use the MMA, interview Agents.
My name is Jaime Buckley, and I spend a great deal of time on the internet, trying to educate families about the realities of the Money Merge Account Program.
My brothers (who all use this Program as well with their families) and I have established the single greatest collection of Independent Knowledge on the Money Merge Account found on the internet.
We are 100% compliant and 100% approved content. UFF’s compliance department has gone over each page and approves what we teach. Use what we have for free and do your homework. Please make an educated decision for you and your family, and don’t rush into this Program, as it’s NOT right for everyone.
You can find us at http://www.thejubileeproject.org
Feel free to call us anytime if you have any questions.
By Jaime Buckley on Mar 14, 2007
I’m on the fence about leaving Jamie’s comment up, but I do agree with her that anyone thinking of doing a Money Merge Account/One Account should do a lot of homework. IF you are financially sound enough, these accounts can be easy to accomplish, with purchasing anything from anyone. I caution anybody thinking of doing this to pay a company to help you.
By Robbie Wright on Mar 15, 2007
I went to the UFF presentation to humor a neighbor, and it was as full of holes as Swiss cheese. I have written an 8-page memo on the subject that is available to anyone looking into this product. I’d say that 99% of people will NOT benefit from this product, and if the equivalent of a “ONE” account ever becomes available in the US, the software will be useless. If you want the memo, email me at my first initial last name at gmail.com.
By Paul A. Broni on Mar 25, 2007
Paul, I would be very interested in hearing how you come up with that statistic of 99% NOT benefiting from the MMA software. For someone who went to one meeting, versus someone who uses the Program and has been explaining the program for over 6 months…I would really like to know how you came to that conclusion.
I will be emailing you for your memo.
Robbie, you shouldn’t have a problem with keeping my comments up. All I would like to do is give people the sources to educate themselves, and let them chose for themselves.
The hard part of this or ANY product or service, is getting someone to understand. People make a great many assumptions with MMA, and lump it in with other programs they hear about, or have negative feelings about.
That’s ok. However, the real question you just might want to consider is:
What IF this Program WAS everything it claimed to be? Is it worth the time to do the research, especially when you don’t have to buy anything?
The most common thing that happens when I open my mouth, is crosses come up as people scream “He’s selling! He’s selling!”
Well, I guess I am (on a principle, anyway). I’m trying to share with you about what this does for my family personally. I have personally been sold the program, and took my own 29 year mortgage, and shaved it down to 8.8 years and saved $109K in interest.
Maybe you could do something like this on your own, but as for myself and dozens of my clients…we simply couldn’t. So this helps us, and I’m grateful for it.
The MMA has nothing to do with the One Account, which is a first mortgage variable. That can kill you, should the market go up even one point. Heck they even have a warning section for those looking into the account. A USA version might be CMG, which is also a first position variable rate.
However, the MMA program is designed to save you money and get you to zero as quickly as possible, keeping your finance charges as low as possible at all times. Also, keep in mind that the MMA Program is guaranteed in writing or your money back.
Anyway, it might be something to consider. I know, this might sound like a sell pitch…but tell me how I can possible share with you what I know, and have you NOT think it to be a pitch?
Just invest the time in yourself. You and your family are worth the effort…find what works best for you, ask professionals and make a decision. What could you possibly lose?
I’m just glad you’re asking questions.
By Jaime Buckley on Mar 26, 2007
Jamie, I apologize for the “her” reference in my previous comment!
In my eyes, the theory behind a money merge account and the One Account are one in the same. You simply lump all of your salary into the balance of your home. That can be done with a fixed line of credit or a monthly variable line of credit. The instrument that is used isn’t that terrible important to me, it’s the basic theory behind the product.
In my particular instance, I can manage this without the expense of additional software, except of course, Quicken. If some people need $3500 software to help them out, more power to them. In my personal opinion, it just isn’t needed.
And again, I agree with you; one of the hardest things about this particular idea is getting people to understand.
By Robbie Wright on Mar 27, 2007
It seems as if I’m entering this a little late as the last post I see was on Mer 27, 2007, but I had a few questions/comments.
I don’t currently have a need for a Money Merge Account, but I have been looking into it and even started a blog looking for questions. As I go, I learn a lot more. But it seems like everywhere I go I find a lot of Mortgage Brokers/Professionals who are ranting and raving that the Money Merge Account is a scam, but I haven’t found a single person who has purchased the product who has claimed such a thing, or even a single person who was upset with the results.
I like what I know of the Money Merge Account — which isn’t much — and it’s nice to read posts where people are open minded.
Also, I’m glad you kept Jaime’s post up and didn’t delete it. It’s nice to find somewhere where people are out to help/educate people, not necessarily to sell. Also, the link he provided is out of date as it is no longer has a .org suffix, but a .com now.
Now I’ll ask my usual question: Is there an agent who feels guilty because he/she thinks he/she is scamming somebody? Is there a home owner who is using the Money Merge Account who regrets every day that he/she ever purchased it?
I’m not converted to the Money Merge Account. I stand alone. But if I don’t get some legitimate claims sometime, I just might become entirely pro-MMA.
By Bobo on Sep 28, 2007
As a personal financial planner who abhors debt and has written a book devoted exclusively to debt elimination planning and strategy, I was quite intrigued when I first “discovered” the Money Merge Account.
Previously there was virtually no strategy available to eliminate mortgage debt faster other than to make additional payments.
The videos were compelling. The results claimed were enthralling. The testimonials were heartfelt and sincere. I thought I had discovered the Nirvana of debt elimination tactics. I thought I would be able to offer clients a faster, easier, and better way to eliminate all debt than ever before with this new tool. But first, I needed to know how it worked.
The fiscal efficiency that allows a mortgage to be paid off so much faster appears, and is presented to be achieved by a combination of a heloc utilized as a checking account for interest cancellation and the money merge program telling you when and how much to withdraw from a heloc for maximum efficiency.
However, I am an analytical and I needed to know exactly where the numbers came from and how such outstanding results are actually achieved.
I called a Ufirst agent and requested three illustrations. The first two I had done with a $273,000 30 year 6.3% mortgage at inception, with $5850 net monthly income,$500 discretionary income, and paying the $3500 fee out of pocket, or including the fee in the heloc. The third was the same as the first except I added a $10,000 vehicle loan to be paid off with the heloc.
The results were amazing indeed. Paying the fee out of pocket resulted in saving $163,863 total interest and 13.1 years. Including the fee in the heloc resulted in saving $156,983 total interest and 12.6 years. The result of including the vehicle loan allowed me to save $180,730.60 interest and 15 years. I was very impressed, but still uncertain how the results were achieved. The agent attributed the savings to the intelligence of the software combined with interest cancellation from the heloc.
I thanked the agent and said I would let him know. I then ran a 30 year amortization for the mortgage. The schedules from ufirst and bankrate were the same. No funny business there.
I then added my $500 discretionary income as an extra monthly payment to the mortgage and compared the results to the MMA results. Again, I was amazed. Including the $3500 fee in the heloc, the MMA would cost $6879 MORE than simply doing it myself. Paying the $3500 fee out of pocket, using the MMA would cost 77 cents less than doing it myself.
The advantage of the MMA and the extraordinary results claimed is derived EXCLUSIVELY by making extra payments to the mortgage. There is NO advantage or efficiency to be achieved from the Money Merge Account.
The time and cost reduction achieved from including the vehicle loan in the illustration was derived by rolling the $250 payment into the mortgage payment once the $10,000 debt was paid off. That is, very simply, debt rollup.
As UFirst says, “It’s not magic, it’s math.” they are correct. When you do the math there is a huge advantage to paying off your mortgage early. There is NO advantage to utilizing a heloc and paying $3500 to tell you when and how much. Still, there remains no available strategy to eliminate mortgage debt faster than to make extra payments.
At worst,the UFirst presentation of the MMA is fraudulent. At best, it is an extremely deceptive misrepresentation of the product and the benefits derived.
In fairness to the agents selling it and the clients using it, I do not believe they understand how it works, or as is the case, doesn’t work. I do believe the principals of the company do know how it works, and they allegedly spent $2 million dollars to disguise the fact that it doesn’t.
By Larry Armstrong on Sep 28, 2007
Hmm, interesting. I’m not a numbers guy. To say the least, I barely made it through math in High-School. (Math wasn’t my favorite subject) Can an ordinary guy like myself do something like this by myself without understanding all the math and without having something there to show me what to do with my money and when? Or is doing this by yourself just for college experts?
By Bobo on Oct 1, 2007
@ Larry–
I don’t believe that the uFirst product is a scam per-se, it is just taking advantage of people who don’t really understand what it is doing. It’s called capitalism and if they can sell it, more power to them. You are right however, it is simply math.
You are not actually paying extra on your mortgage, your actually letting your money that you normally have in savings earning 4% sitting in your HELOC “earning” the rate you pay on that. Interest cancellation is a great term to describe it. Normally when you pay extra on a mortgage, it goes into a black hole and you don’t get it back until you sell. When it is in a HELOC, you still get the benefit of paying down, but still have the ability to withdraw it if needed.
@Bobo–
You do not need to understand the math to make it work. Some people like crunching the numbers to understand how it works, but it is not completely necessary. In the UK, they simply have the entire mortgage in a HELOC and don’t have to pay down the 1st mortgage every now and again. Keep looking around the net. I hear Get Rich Slowly will be doing a write-up about it shortly. Click around on my blog and you’ll find some other links to the Simple Dollar discussion as well.
By Robbie Wright on Oct 2, 2007
You say they have the entire mortgage in a HELOC? Isn’t that risky? Maybe I just don’t understand it properly. It seems, though, that it could cause some pretty serious problems if thing didn’t work out.
By Bobo on Oct 5, 2007
Thank you, Larry Armstrong, for running the numbers for me. This confirmed what I have thought all along, but wasn’t able to “prove” without doing a thorough analysis. My mortgage was paid off years ago by using common sense and adding $$ to principal when available.
By Nancy on Oct 21, 2007
@Bobo–
Yes, it could cause problems for people who are not disciplined with their money. There isn’t any risk that I can see having your entire mortgage in a HELOC. Rate is obviously a concern should anyone thinking about it should have a thorough understanding of the rate on the LOC.
By Robbie Wright on Oct 21, 2007
Will MMA work for people who are living paycheck to paycheck?
By thenu1 on Oct 29, 2007
Technically, yes it would work for anybody, but you have to be disciplined and not overspend your money. Generally speaking, I’m not sure people that live paycheck to paycheck would have the self-discipline to not do that.
By Robbie Wright on Oct 30, 2007
Thanks Larry (Armstrong) for your detailed comments. I’m a mortgage broker who was recently introduced to, and very intrigued by the MMA. I want to hear as much criticism of the MMA as I can find so that I can understand it. We all know the benefits of prepaying your mortgage, but I’m looking for the pitfalls of the MMA to see if I am a good candidate to do it.
Even if the mathematical calculations are complicated, the theory should be explainable. I think a helpful term to explain why it works to use your HELOC to pay down your first mortgage is that the “effective” interest rate is lower. In the early years of a 30-year fixed rate loan, most of the payment is interest, so the effective rate is much higher for those early years. Only after 30 years is that 6% rate the true rate of interest you paid. With an interest-only HELOC, the effective rate is the actual rate - I think!
Larry, I have one follow up question: You ran your #’s assuming that you paid an extra $500 / mo. (your discretionary income) towards your first mortgage. Is this what the MMA would tell you to do, in effect?
By Jim Whitehead on Nov 2, 2007
I don’t understand why so many people seem to think that the interest rate paid (assuming a fixed rate) is higher in the early years. They are using someone else’s money and are paying interest on the amount owed. As the balance goes down, the amount of interest paid increases, but the rate remains the same. The same works in reverse when you put money in a savings account. The rate the bank pays is the same, but if it is left to compound the amount earned increases.
By Nancy on Nov 2, 2007
Whoops — the amount of interest paid decreases,……
By Nancy on Nov 2, 2007
The devil is in the details. I would want to see a VERY detailed analysis. Why wouldn’t someone just get a 15 year mortgage! No $3500 software. No home equity interest charges. Make any additional mmtg payments there.
Fancy software is not going to help people escape the real estate bubble in my opinion.
By scott on Jan 5, 2008
I’m kind of new to this whole forum thing and am definitely a late comer to this discussion. Our company does sell the Money Merge Account program through our My Debt Edge(tm) Advanced Credit Strategies workshops.
There are some basic principles that are not accurate in the discussion thread that I would like to address.
1. The entire mortgage is not rolled into a HELOC using the Money Merge Account Program. There is NO refinance of the first mortgage necessary. This makes the product transportable from one mortgage to another, which is very different from a “One Account”, “CAM Mortgage”, “MacQuarie Loan”, “CMG Loan”, etc. With those other “mortgage” based products, each time I buy or sell, I have new closing costs/points to pay. I every case I’ve seen, those costs far outweigh the cost of the Money Merge Account program.
2. The amount of money that is used to pay down the first mortgage from the HELOC is a major factor in the effectiveness of this strategy. The Money Merge Account program uses certain mathematical calculations to determine the exact amount of money to transfer to minimize the interest paid on the HELOC (using a person’s income to offset interest) and maximize the interest saved on the first mortgage. What makes these calculations unique is that they are dynamic, meaning that they adjust every time you spend money (expenses) and every time you earn money (deposits).
2. Interest Cancellation is indeed a major factor of how the software works. Here are some math examples of the interest cancellation effect based purely upon when a person gets paid and the effect of depositing that amount into the HELOC.
Example: This example assumes a 10% rate on the HELOC.
If I have a $0 balance on my HELOC and I spend $5000 on the 1st day of the month (let’s say it’s a transfer to my mortgage), providing that I make an interest only payment on the 1st day of the next month, I would pay $41.67 in interest for the $5000.00 that I borrowed for the entire 30 days. However, if I earn $5000.00 a month and if I deposit $2500 on the 15th and another $2500.00 on the 30th, my average daily balance (which is the interest calculation method used on HELOC’s) is reduced. Here’s the math @ 10% interest.
10% / 360 gives a daily factor of .000277777
$5000.00 x .000277777 = daily interest charge of $1.388885
$1.388885 x 30 = 41.67
$5000.00 x .000277777 x 15 = 20.83 (because the balance is re-adjusted by the bank on day 16 when I deposit my $2500.00 on day 15)
$2500.00 x .000277777 = a new daily charge of only .6944425
.6944425 x 15 = $10.41
So, here’s the comparison $41.67 vs. $31.24 ($20.83 + $10.41) based on the simple strategy of depositing my income into the HELOC. That’s an interest cancellation savings of $10.43 or roughly 25%. That means my 10% loan wasn’t a 10% loan, it was effectively a 7.5% loan.
Now, the effect of that transfer towards the first mortgage create a compression in the time/value cost associated with the money from the mortgage. In essence, I just canceled apx. $28,000 in future interest and I increased the amount of every future principle payment that is going to the mortgage.
The big question is, was $5000 too much to transfer or too little. Using the purely hypothetical numbers that UFirst uses in their corporate example, if I’m only 90% right, I still lose by not purchasing the Money Merge Account program.
Now, if you’re sending an extra $1000/mo to your mortgage and are disciplined enough to do so, it may not make sense to use the Money Merge Account program. Our experience is that most people aren’t disciplined enough. More importantly, who has $1000.00 extra to send towards the mortgage every month.
The Money Merge Account program allows you to accomplish the same thing, on your current income, with zero stress.
One other quick point. The Money Merge Account isn’t about just paying off your mortgage. It’s about fiscal responsibility and solid money management to maximize the power of your money. It’s not for everybody, but if you want to pay off your mortgage, we’ve not found an easier way to help our clients do it.
Travis Mitchell
Debt Free Project
By Travis Mitchell on Jan 6, 2008
Hello,
I read a lot of stuff about how bad the MMA is or how you can do it yourself. There are usually 3 to 4 major points that people are missing about how the program works.
1. The discretionary income that is left over every month is NOT simply thrown at the first mortgage. It goes into the leverage engine. Yes, I said leverage. Thats the point.
2. Have you ever been to a webinar about the program? If you have and did not see how we use the discretionary inside the leverage engine, I apologize. Please get a hold of myself or anyone else and we will show you how it works.
3. When the program derives a number that is called an equity contribution, it is based on that persons current financial position based on what they inputed into the software. It is dollar and time specific. This means that the amount and time changes because we are capitalizing on the time value of money.
4. It costs $3500.00! Yes it is a significant investment. It is also intended to be taken out of the equity line to be payed back over a short amount of time. You are borrowing the banks money to pay off the bank loan fueled by your monthly income. Everyone that I have run into promoting this program wants to help Americans. We also have to educate people on how money works and how the program works. That takes a lot of time. Time on our parts to learn everything we can and time on our clients parts to listen and take note. If it was $99.00, how much education do you think you will get? $99.00 bucks worth. How much support do you think you will get afterwards? $99.00. We increased our client support hours to 6am to 10pm. If something changes in your lifestyle, they can help. Thats the point.
So, the discretionary income every month is not simply applied to the first mortgage. Anyone can do that. The money goes into a leverage engine that allows a larger amount to be directed towards the first mortgage ( which is not necessarly a big HELOC, thats the other programs ). When these amounts are applied, they are not gone. Meaning if you want to access your money again, you can do so through the HELOC you are using. There is no impending financial doom because people are ‘dumping’ everything into their mortgage. As you pay down your mortgage, you simply move the HELOC into the equity you built into the first mortgage by using the program to re access your funds.
I hope this clears a few things up. If it does not, let me know and I will host webinar for you to answer questions.
Thanks,
Robert Wilson
MoneyMergeChicago
By Robert Wilson on Jan 17, 2008
http://www.bankrate.com/brm/news/mortgages/20061102_equity_accelerator_mortgage_a1.asp
The One Account is Only in the UK. Here are two comparable programs in the US. Each have a specific client base as does the Money Merge Account.
By Mortgage Accelerator on Mar 22, 2008