We paid way too much to learn what should be required learning in every high
school in the country. It isn’t even a learning so much as an attitude adjustment.
Had I known this twenty years ago I would be retired today. It is working for me
now and that is all that matters. What has changed about our attitude is how
we view our budget. At any given time now I can tell you to the penny how
deep in debt we are (121954). Under the old system-the system that most Americans use-the system that got the economy where we are today, we didn’t have a clue. We felt rich if we had 3,000 dollars cash in the checking account, or a zero balance on a credit card.

So yeah, we paid too much. But education is worth investing in. We try to pass
it on by teaching what we learned for free. The primary advantage to the HELOC
shuffle is it is an enforced savings program. Fail to repay the loan and there are
consequences. For us it has been worthwhile. We went from saving nothing to
saving 45% of our income. It is worth three hundred bucks a year to us to accomplish that. Again, the ideal heloc shuffle would be savings account based
and you would have at least a ninety day cash reserve for emergencies on top of that.

Listen to Joe, and then make sure your children understand what he’s saying.
But also make sure your children understand how to make compound interest
work in their favor.

ten thousand dollars pops the amount going to principle up by around fifty bucks
on my mortgage. When we bought into this the heloc was 8.5% and a 10,000 heloc balance would cost you about fifty bucks a month. before you drop your
paycheck in – so it is actually less then that.

Granted, the ideal is to wait four months and save up the ten thousand dollars
then do the heloc shuffle based on a savings account rather than the heloc.

The cost of doing that in my life would be over two thousand dollars in interest
paid to the primary mortgage.that I’ll never see again vs less than 200 bucks
paid to the heloc.

But wait, it gets better! The heloc is a variable interest loan and has dropped since we got it from 8.5% to 3.5%. My fixed rate loan is 5.65%

Based on those figures alone it would make sense to keep the heloc maxed
all the time (provided every nickel goes to the primary mortgage). But that is
too wild for my blood in these uncertain times. We were taught to keep a heloc
limit of 2.5 x our monthly take home. We are much more conservative using
at more like 1.5% Harj Gill recommends a heloc no larger that your monthly take home. It’s hard to bury yourself with a conservative instrument like that.

We are a family on a mission. Over the last 18 months we’ve dumped 45,000
into the primary mortgage. With the reverse compounding the actual money realized was 52,000.

We dropped from 164000 to 111254 during that time period. With our next payment we cross the half way mark. By this time next year we should be around 65,000.

The original estimate was seven years for us. We will come in to the finish at
five or less. Even if they yank the heloc which is a possibility. They cut it from
54000 to 19000 last summer. Knowing what we know, we will prevail.

.

$10,000 today will save more than $2500/mo for 4 months, agreed, but if that $10,000 is pulled from the HELOC to do so, it negates the potential savings and one is better off just doing the $2500 monthly. It’s easy to show the ideal HELOC use is where the lowest balance each month approaches zero, this keeps the HELOC average daily balance to a minimum.

We’ve been doing it now for 18 months without fancy software. Well not quite true. I did play with this shareware program during its trial period.

http://www.pcshareware.com/payoff.asp

I am certain the agent took your other debts, say a $300 car payment, and let the software add that $300/mo once the loan was paid off. As though you will never buy a new car, or spend on anything else. So why not take all of your current payments and assume they’ll go to the mortgage? Plug that into my sheet and see what happens. That’s as absurd as what the agent did to you, but I’d bet it drops your payoff closer to 8-9 years.

I’m just beginning to contemplate the MMA, trying to learn as much as possible about it. One thing I’m wondering about and not seeing much discussion on is the average daily balance of the heloc. On their video, UFF is showing that the interest amount charged on the heloc is computed from the average daily balance of the heloc. They’re saying that if you deposit your income checks to the heloc, this deposit reduces the average daily balance, which lowers the interest that accumulates, which is why you can use a heloc with a higher interest rate than the first mortgage.

When I run my numbers on your spreadsheet I see I can payoff my mortgage in 15 years. When my prospective MMA sales guy runs my numbers, -same numbers-, the MMA shows my payoff to be 10 years…

Wouldn’t the extra 5 year payoff reduction be due to the shuffling of my principle back and forth between the first mortgage and heloc, with the low interest amount accumulating on the heloc?

Check out the company’s video which explains this and please let me know your thoughts…

http://www.mathnotmagic.com/presentation

Thanks,
TR

Doesn’t the software automatically “find the fastest way to zero” already? Now users have to choose between additional factors which could affect its ability to do that? BTW, the reason I think this “feature” is still listed as promotional is it is in fact very beta.