For those who got lost when Jen mentioned 'the software', she is referring to the product she promotes, which you can check out by clicking on the link in her signature. I took the time to watch both the overview and the video tour on her website, then applied the principles to a real-life situation my daughter has. Her primary mortgage is interest-only, and she has an existing HELOC with a payment that isn't interest-only. Using very simple assumptions, this strategy paid off both the primary mortgage and the existing HELOC in about 11 years. Very cool! I hasten to add, you have to understand the interest calculations in both cases to do this on your own, and even then it probably isn't as efficient as the more sophisticated software that Jen mentions. Now let's throw her some curves, shall we? Jen, what if the user doesn't have a regular income? Would it still work if the income was at random intervals, or varied from month to month? Cheri

Hi Cheri,

A curve-ball huh?

As long as you have verification of 2007 income, via 1099 or W2 etc, yes it will work, because the software takes life situations into consideration and
adjusts accordingly.

When you apply for a HELOC you are asked for proof of income, although there are a few No Doc Personal Lines of Credit available, and as long as you have the characteristics we require for the PLOC it can work just as well.

So, bottom line. yes it will work with a varied income.

The program will not work if you have no income at all.

Here's something neat to note:  Let's say the analysis tells you the minimum HELOC you need for the program to work successfully is $15,000, while the actual equity that you have access to is $40,000.  We suggest taking the whole $40,000 as a precaution - against illness - not being able to work for a couple of months - or for any other unforeseen circumstances.

This may perhaps add 2 or 3 months to the 'paid off time' of your home, but as you are saving so much and so many years off your mortgage, it's a very good tool to have.  As I said in an earlier post, you can take money out and put money in as it's Open-ended.

By the way, on the day your home is paid off, so is your HELOC or PLOC, and it's really great to see how it works in an analysis! 

Jen

Jen, great information, thank you. Now let's talk about debt roll-down, which Jen's program isn't. To use your mortgage to become debt free, or for any other purpose, you have to have one! What if you have no mortgage and would still like to accelerate your debt pay-off? There are many, many programs out there that will use sophisticated algorithms to help you strategically make your payments to pay off your loans more quickly than you would using "common wisdom". Is there anyone still out there making slightly over the minimum payment to every credit card? Stop it! You can get a software program, use a spreadsheet program, or just wing it, depending on how efficient you want to be, but the trick is as follows. Write down your revolving credit debts, i.e., credit cards and lines of credit in order of smallest to largest debt. NOT interest rate--that's a trap that will keep you in debt forever. Stop using your credit cards to accumulate debt--find a way to live within your means, get a part-time job, ask for a raise, whatever. Start where you are right now and resolve to pay off your debt. First month: Make the minimum payment to all but the first (smallest) debt. To that one make at least the minimum payment, but preferably more. Doesn't matter how much more, or even if you can't pay more than the minimum this month. Next month, the debt should be slightly lower. Make the same payment next month that you did this month, adjusting what you send to that first debt to use all the extra over and above the minimums on the other cards. Continue in this fashion until the first debt is paid off. Now take the money you used to pay for the first debt and add it to the payment for the second. And so on until all are paid. Toward the end, the payments are massive, so it gets to be like a snowball rolling downhill and picking up speed and mass as it goes. That's debt rolldown. OK, it's easier said than done. I'll admit that. Still, if you don't do it, you're stealing your future. What problems keep you from doing this? Let's see what the community can suggest to help. Cheri

Hi Cheri,

The only problem with using home equity to pay down credit cards is human psychology -  more often than not, the credit cards creep back up again!

Home equity is something which is treated with a lack of care in the US, for very good structural reasons (see why at http://hubpages.com/hub/Foreclosures--Sub-Prime-Loans--And-The-Real-Reason-The-US-Housing-Market-Is-In-Free-Fall), but despite ALL the incentives to act irresponsibly, the equity in your home is your long-term protection against the volatility in house prices that will inevitably rear its head in the US market every few years.

I agree that these instruments can be used effectively by people with good self-discipline, who know what they are doing, but I suspect that for the average home-owner it would be better, if less efficient, to tighten the belt on the budget and pay the cards off the old-fashioned way.

Great forum, BTW!