A couple random thoughts today. I continue to observe that when discussing MMA, it’s difficult to find an agent who will actually discuss numbers. Indeed, a couple weeks back, when I posted an actual snapshot of the MMA dashboard doing its thing and showed how poorly it performs, did I get an agent writing to question my assumptions? No, because the numbers don’t lie, and the dashboard betrays its own failure. What I did get was a list of supposed supporters of MMA, a combination of paid speakers and magazine publishers. Magazines you’ve not heard of as they are published on demand and passed along as an advertising tool. But that was all agent Terry Goff was able to offer. She suggested that if I disagreed with the esteemed people on her list, that was tantamount to my calling them all “dumbasses”, her words, not mine.
This leads me to discuss logical fallacies. First, is the one Terry is guilty of, above. “Argumentum ad verecundiam” or appeal to authority is what one does by avoiding the topic at hand and instead citing a person that commands some respect, either because of their celebrity status or job title. This is how you might be convinced to buy a certain brand of aspirin from a star in a white lab coat, but this is not how you want to make a financial decision. Next is “post hoc ergo propter hoc” which means “after the fact, therefore because of the fact.” The agents toss around some pretty wild numbers, funny how this program has only been around a few years, but every user is on track to save $178,000 in interest, and always more than originally thought. Even if any user is actually saving money, this proves one thing, that prepaying your mortgage works to save you some interest. I can tell you that 100% of the people who take their $3500 and simply sent it to the bank as a prepayment will be ahead far more.
There is likely a coined phrase for another fallacy regarding making as issue that’s trivial far more complex just to confuse the listener. If there’s no term for this, I propose “MMA fallacy” and I offer an image from another agent’s site;
Wow! Is the math really this tough? I better spend $3500 to avoid this, ’cause math frightens me!! The very simple truth is that mortgage math is simple. Very simple. A 6% mortgage (The classic MMA example) accrues 1/2% interest each month. You look at your balance, shift over two decimal points (that’s like dividing by 100) and take half. Of course, 6% is easy, your mortgage might be 6.25% in which case you might want to consult a $4.99 calculator. Regardless, there is no higher math involved, just fourth grade arithmetic. Another bit of hyperbole from Sue Edward’s site (Note – she has moved on, her site is down) which I never tire of is the claim that “there has been virtually no change to their family’s standard of living or budget.” Come again? If you are fortunate enough to have 20% of your net income available to you to prepay your mortgage, month in and month out, and this truly will not impact your budget, well, then you’re not likely to be seeking out such a program in the first place, are you now?
Enough for one day, until next week.
Joe