A New MLM Scheme?

Yesterday, Dave Ramsey and a caller really got into it over something called "United First Financial." Dave called it an MLM (Multi-Level Marketing) scheme and the woman insisted that he didn’t know what he was talking about while Dave insisted that she couldn’t do math and didn’t understand how a mortgage works. Things got really heated when she let on that she was a Realtor. Wow. Of course, in true MLM distributor fashion, she claimed that Dave Ramsey couldn’t know anything about their services if he had never been to a presentation.

Having been involved in a couple of MLM’s in the past, and having studied various aspects of them, I thought I would check into this "United First Financial." From what I gather, the program involves purchasing a $3500 web-based software program. You also take out a HELOC (Home Equity Line Of Credit.) The HELOC has to be at a lower interest rate than your mortgage. You then use checks from the HELOC to pay your mortgage and other bills. The $3500 program apparently tells you the optimal time to pay your mortgage. The point to this is to hit your mortgage account right before interest is calculated so that interest is calculated on a lower amount. This can apparently save a bunch of money in the long run.

To me, the whole process seems over-complicated, expensive (if you have an extra $3500 around, why not just dump it into your mortgage in the first place?) and has the potential for dangerous amounts of debt to be racked up. Dave Ramsey’s books can all be purchased for under $25. I’d recommend starting there.

If anyone who has been or is involved in this stops by, what are your thoughts?

[NOTE: this entry came over from my MSN Spaces blog, and had 5 comments. The original post and comments can be found here.]

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