My Journey to Financial Freedom Part 4
Filed under: Debt Free, Economy, Finance, Financial Freedom, Money Merge Account
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Our HELOC Story
In August 2007 my husband and I applied for a home equity line of credit (heloc) because we were looking to invest in more rental properties. We decided to use one of our current rental properties as collateral for the heloc. At that time the property was estimated at $450,000 with a mortgage of $149,000. The loan officer recommended that we request the maximum line of credit amount of $195,000. We planned to use between $50,000 and $80,000 max in our investment quest, but based on his suggestion we went for the larger loan amount which proved to be a mistake later on.
The bank where our heloc was established was a problem from the beginning. When we signed all of the paperwork for the loan everything was in order. All of our information was accurate including my husband’s name and my name. We signed the notarized papers and the loan amount was authorized. When the money was funded, copies of the loan documents were sent to us and instead of my husband’s and my name on the loan there was an unknown woman’s name in place of mine. Not only had we never heard of this woman, but the bank seemed baffled as to how her information got on our loan documents. We went around and around with the bank for a number of months before we were successful in having her name removed from our account. Due to the mess we had experienced with this heloc, we allowed it to sit for a year without use.
Because we had a heloc with a zero balance established when we became clients of United First Financial we decided to use it with the Money Merge Account system. Whether you have a heloc, or decide to get one when you start using the Money Merge Account program, a heloc works exceptionally well with the system. For those that don’t have a heloc, the Money Merge Account works well with a savings account. It is your choice whether to use a heloc or a savings account with the program.
“What If” Planning
The Money Merge Account will give you financial guidance and keep you from making bad financial decisions. It looks at every cent of income and advises you of how much you should pay down in principal on a particular debt and when is the right time to do it. If at any time you decide that you do not want to follow the guidance of the software for a particular situation you do not have to because you are always in control. A great financial benefit of the Money Merge Account is that it will give you “what if” situations. You can put in other option choices and the software will show you what the results would be. Then you can determine which is the best decision to make at that time to become debt free.
United First Financial Sign Up Process
In August 2008 when we became clients of United First Financial the sign up process was much more difficult than it is today. Then the process took about 10 days to get everything signed, mailed in, and approved before we received access to the Money Merge Account. Today the sign up process is much more user friendly and can be done in a shorter period of time. As a matter of fact you can sign up over the Internet with a credit card as a down payment.
Our Money Merge Account Beginnings
We didn’t actually get started with the Money Merge Account system until September 2008 because we had to get our checking, savings, and heloc accounts set up at the new bank. Once they were in place we were ready to begin our mission to become debt free.
Remember I mentioned that we got our heloc approved in August 2007? As many of you know a lot happened from August 2007 to August 2008 as far as property values go. In August 2008 when we started drawing funds from our heloc our bank decided that our property value had decreased so they lowered our authorized credit limit from $195,000 to $112,000. At the time that wasn’t a problem for us because we didn’t plan to draw more than $50,000 or so anyway.
How the Money Merge Account Program from United First Financial Works
With a HELOC
If you are using a heloc you need to withdraw an advance from it so that you are able to deposit your income into it. Think of it as if you were making a payment to your heloc. For as long as possible you let your income stay in the heloc, thereby reducing the amount of interest that you are charged because with an open-ended heloc loan, the interest is accrued on the daily average balance. You withdraw your income in the form of an advance from your heloc at the appropriate time to pay your bills.
With a Savings Account
If you are using a savings account, you will put your income into that account and leave it there as long as possible to gain interest and then move the money to your checking when it is necessary to pay bills. After a designated time when the balance reaches the optimum level, the Money Merge Account will give you the appropriate instructions to move the money.
You do this month after month until your heloc balance or your savings account gets to its most advantageous level. At which time the Money Merge Account software will suggest that you take a certain amount of money, from either your heloc or savings account, to pay down the principal of a specific debt or multiple debts. You will be told the exact date to make the payment and the precise amount to pay on each debt to allow for the greatest amount of interest cancellation.
Remember in “My Journey to Financial Freedom Part 3” when I told you that our United First Financial agent was very conservative when he put our financial information into the program? Once we got our Money Merge Account program ready to go with all of our accurate financial data inserted, we learned that if we followed the guidance of the software, our 26.5 years of debt would NOT be paid off in 16.3 years that was previously projected, but we would be debt free in a little over 12 years. The first projection was very satisfying to us so when we saw that we had 12 years to go to become debt free we were very much elated and thrilled.
What’s to Come in the Next Article
In my next article I am going to explain how the Money Merge Account works and give you our specific financial data. I will show you that without changing our household budget in any way, we have paid over $28,580 down in principal in one year. That amount can be compared to the previous year, before United First Financial became part of our lives, when we paid only $6,428 down in principal. I would imagine that most of you are in the same situation as we were before the Money Merge Account program. It might be worth your time to take a look at the last year and calculate how much principal you paid down. Then you may decide to join me on my journey to financial freedom with United First Financial.
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Tags: debt, Debt Free, heloc, Money Merge Account, principal, savings, united first financialRelated posts
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[...] Original post: My Journey to Financial Freedom Part 4 [...]
[...] want to recap what I covered in “My Journey to Financial Freedom Part 4” where I told you about how we had trouble with the bank where we had our home equity line of credit [...]