If you work in the financial services industry or know someone who does, you have likely been hearing about Money Merge Accounts.

The premise behind these accounts is that you can eliminate debt to ½ or as little as 1/3 of the timeline. The fee being charged is only for software. The software will show you how to eliminate all of your debt, including your mortgage. Estimates are given of roughly nine years.

Is a Money Merge Account the right system to employ to eliminate debt?

It depends upon how you look at things. Some people use a real estate broker to purchase a home while others believe they get a bargain by purchasing a FSBO (For Sale By Owner) home. By purchasing FSBO, no real estate broker commission is paid and some people believe they must be saving money. After all, a real estate commission adds around 6% to the price.

Except don’t forget what a qualified real estate broker can save a seller or a buyer in any given transaction. Agents can add value owing to keen negotiating skills, knowledge of the market, or hidden defects.

The same logic holds true when engaging CPAs, financial planners, and investment counselors. “Do it yourself” thinking seems to not apply to medical professionals. I suppose because the risk of being your own doctor or dentist is painfully evident whether the treatment be successful or not.

So how do Money Merge Accounts (MMA) work and what are the pros and cons?

How it is presented is that the “User” purchases the software and opens a home equity line of credit. The first charge to the home equity line is, of course, the $3600 fee to purchase the software. The User then engages the software, inputting personal information regarding income and debt. The software then projects a pattern of using income, credit from the home equity line of credit, and altered spending patterns that result in the elimination of all debt in less than half the time.

The User has to “deposit” all of their net income to pay down the home equity line of credit. Then, the User draws from the home equity line of credit to pay their normal living expenses. The concept here is that when you pay the “balance” in full, you pay no interest on the money briefly borrowed or substantially less interest owing to the substantially smaller balance on the home equity line of credit.

The User has to follow the instruction of the software and make an advance from the home equity line of credit and apply it as an additional principle reduction to their first mortgage. In this manner the larger amortized balances of interest on a first mortgage are bypassed and the smaller principle amount is transferred to the home equity line of credit. There, the User will benefit from “residual” of net monthly income to aggressively reduce this new advance. While whittling down the principle on the home equity line, the User is paying substantially smaller amounts of interest.

I attended a meeting that explained this process. As I sat and watched the whole plan unfold, I became excited. Wow. Anyone could sell this! It was amazing! I looked around the room. There were Realtors, car salespeople, and mortgage brokers. Interesting. These were not stupid people.

These professionals were not as busy as when sub-prime mortgages and easy credit terms ruled the roost.

And then I remembered when I’d felt that way before. It was in my eighth grade algebra class when my math teacher revealed the magic of math before my very eyes…and I understood it.

The feeling we get when we understand a complicated math problem such as the money merge account can sometimes lead us to believe that the system or product being explained is a great idea. When we have a flood of understanding, we are filled with endorphins and have a sense of superior accomplishment.

This is how “magic pill” sales pitches work.

It isn’t necessarily a bad idea to prepay your debt. And for some, the purchase of the software may be a useful tool to accomplish that end.

You will have to be credit worthy (around a 660 credit score) and have sufficient equity in your home to engage in the MMA system.

For $3600, I could engage the services of a qualified Certified Personal Accountant for around 36 hours or so to help me move toward my best financial life. With this expense, I get the bonus of a relationship with a professional who knows me by name and gets to know my strengths and weaknesses. That professional will even take steps to maximize my personal strengths and minimize my personal weaknesses. A professional is also knowledgeable about money, markets, and risk. A CPA can certainly maximize my tax savings to free up assets to reduce debt.

For $3600, I could buy all the coffee and snacks for a debt reduction group (debt therapy) for over two years of meetings.

Dave Ramsey has been cited in some of the meetings demonstrating this software. On his web site, however, he says, in effect, that if someone has $3600, they ought to go ahead and use it to reduce debt. Focusing on debt reduction aggressively (duh!) usually results in a significantly reduced time line to eliminate debt. The “magic pill” sales pitch concerns him.

The President of Operations for Consumer Credit Counseling Services, Johnny Cantrell says “some clients are not financially knowledgeable enough or sophisticated enough to succeed with their system.” In a nation where the average savings rate has been a negative number for several years, more than 40% of Americans are reported to be two paychecks away from financial disaster, and bankruptcy has risen to an all time high, that statement makes a lot of sense.

The Internet and technology has made the space between humans seem greater and wider. With the shifts that have happened in the economy, it is expected that consumers will be turning back to the quality of highly trained professionals to provide the valuable financial services they need.

Whether someone elects to use software, a highly trained professional, or attempts debt reduction on their own, the one ingredient that is critical is their motivation. Most people feel they need a system, process, or a human being to hold them accountable in order to better guarantee results.

Is a money merge account software system right for you? A financial counselor? A debt elimination group? Slugging it out on your own? Which method is best will depend upon each unique person. The important thing is to chose and get going.

Being covered in debt is demoralizing. It clouds judgment. You miss opportunities. It can be a causation of depression.

For a long time, easy credit has been like a drug given away by pushers and now we are addicted.

Becoming debt free restores your sense of freedom and personal power.