I recently spent a lot of time researching the validity of the Money Merge Account system by United First Financial for reducing the time it takes to pay off your mortgage. The agents selling the software lead you to believe that the system cannot easily be understood or duplicated without the software. It CAN be easily understood. Here's how it works.

I submitted a couple financial scenarios to the agent in my attempt to understand what the system really was, and found that it simply uses your discretionary income to pay off your mortgage. If you submit a scenario in which you have no discretionary income then your mortgage payoff term will be the same as without the MMA.

So that we may compare a traditional payment plan with the MMA system let's look at total assets at some fixed point in time for a particular scenario. For example, if you have a mortgage of $240,000 @ 6% and a monthly mortgage payment of $1,400 it will take you 390 months to pay it off. With a monthly discretionary income of $2000, the MMA system says you can pay it off in 89 months.

For ease of comparison let's use the 89 month mark as our point in time.

MMA System
With the MMA system you will have 1) a house worth some amount of money, 2) no mortgage, and 3) no savings, for a net total of a house.

Traditional Payment Plan
With a traditional method of putting your $2000 discretionary income in a 6% savings account you will have 1) a house, 2) a mortgage of roughly $217,500, and 3) a savings account with $223,504.35 in it, for a net total of a house plus $6,000.

The MMA may not be totally useless to some people. For one, it may help you focus on your finances; two, it may provide some payment flexibility through the HELOC, or home equity line of credit, which it asks you to open. But the reason most people don't use this system is the complexity it adds to your finances and the $6000 in the example above.

Check out the attachment. It's a small Excel worksheet with some financial equations in it.

Is this how you understand the MMA to work?