A friend has been introduced to a scheme using software with algorithms to tell her and her hubby when to pay their mortgage and other bills. It will, she has been told, shrink their 30 year mortgage term to six years and pay the cost in full. She stacks shelves and he drives a truck. They are about, six months into a $196,000.00 mortgage on a new home.

They have to put everything into one bank account, salary cheques and everything, and pay mortgage, bills, etc when the software tells them to.

It sounds like a get-rich-quick scheme, but not for them. Do you have any advice I can pass on to my friends who are VERY interested in it.

I am naturally suspicious of anything that offers to fix things that are hard to fix with consumate ease. The scheme will cost them $3500.00 to buy from the silver tongued salesman who speaks a language they do not understand and blinds them with technical jargon and his sunny disposition. Is the salesman the only one likely to benefit from this?

1. Are you familiatr with schemes of this type?
2. What would you advise them?




MRGANITE

CaptainForest

Morganite ,

This sounds like a scam to me as well.

It is possible to shrink a 30 year mortgage to only 6, but that means they have to make MANY extra payments a year to do it.

And if they could afford all those massive extra payments in the first place, why do they have a 30 year mortgage or even a $194,000 mortgage, since they should easily be able to have saved.

That is why it sounds like a scam to me.

If they do this, they can be certain of one thing. They just spend $3,500 that they could have use towards their mortgage payment that could have reduced a few months or longer off their overall time frame.

KongTheKonqueror

It sounds like a major scam. The only thing I can think of is a similar method for free. I have actually done this and it works very well.

You pay the minimum payment on all your bills except the bill with the smallest amount due. Ignore interest rates. On the bill with the smallest balance, pay as much extra as you can every month.

Once the first bill is paid off, move onto the next bill with the lowest balance. Pay the minimum you were paying on it, plus the regular payment from the previous bill that is now paid off, plus any additional money you were paying on it.

Repeat the process until the largest bill (hopefully the mortgage) is paid off.

The theory behind this is that if you try to tackle the big bills first, the interest from the smaller bills will eat away money that could go towards principle. By eliminating bills, you are eliminating principle and the interest incurred for having the principle.

KongTheKonqueror

Right. The key is to pay the bills on time but only pay the minimum amount due. This way they are still making the required payments but they are eliminating the debt that is easiest to eliminate in a systematic order.

It is called the "snowball method." There is an excellent book called "The Total Money Makeover" by Dave Ramsey if they want to look into it in greater detail. It is a little long for a process that can be summed up in about a page or two.

Morganite

Thank you. On behalf of my friends, I am indebted to you.

M