Complaint Review: John Cummuta - Transforming Debt Into Wealth

John Cummuta's program is a SCAM and it is also not a SCAM.  (I am not someone posting to help John Cummuta sell his product, I think it is complete garbage and only technically not a SCAM, but substantively it is a SCAM).

The SCAM: You search using google.com to find out if John Cummuta is a scam or not.  You will find plenty of reviews that say he isn't a SCAM.  These "reviews" are either plugs for his program that say it is worthwhile, or they are soft attempts to make you think it is not a SCAM but that it may not be as effective as advertised.  The former are probably connected to Cummuta and his marketing campaign, I am almost certain they are since they are from domains that sound oddly suited to his area of expertise with words like debt, credit, wealth, money, and all the meta tags that John Cummuta would use in his primary website.  The danger comes from the soft sell sites that aren't as obviously plugging his product, they even appear to superficially criticize him.  They write that nothing he is saying can't be found other places and that they may not have liked his style.

The aforementioned search results are PART 1 of the SCAM.  The deceptive advertising and marketing which doesn't on its face admit to being part of John Cummuta's large internet advertising web.  PART 2 of the SCAM: if you don't return all the materials that were sent to you for "free" within the allotted amount of time, you are out $500.

John Cummuta's program is really an assault on sloth and procrastination.  If you pay the $10 for the materials to be sent out, you are half way to not returning them in time.  The system hopes you will forget to return the materials in time, or that you will fail to properly track the materials (if they claim they are not received, can you find the paperwork a week later supporting you sent them?  Can you also send this to John Cummuta's people in a timely fashion?).

What the "program" or "system" is besides the gotcha huge $500 charge (the gotcha is partially your fault: he told you there was a trap and you did stumble into it, but John Cummuta should refrain from putting out these attractive nuisances that people hurt themselves on so you are safe from yourself) are some very simple and true bromides about personal finance.  I am not defending him but here are the bromides he hides among all his puffery:
1) Pay off higher interest debts first.
2) Live within your budget.
3) Work more jobs and bring in more money to live below your budget.
4) Use your excess money after your debts are all paid to invest and make your money work for you.  (He only glosses over in the vaguest of terms what making money work for you is, but gives not even a vague hint at how you actually make money work for you).

Misinformation John Cummuta gives you:
John Cummuta misrepresents the time value of money.  $100 dollars today is worth more than $100 dollars a year from now.  Money is lent to you with interest, thus having money in the present time costs money itself.  John Cummuta explains with a mortgage you might pay 2 or 3 times the sale price of your home, but this is misleading.  Assume your home is worth $150,000 in today dollars, also assume your rate of return on money is 10% per $1 per 1 year.  What this means is that if you put $1,000(today dollars) in your investments, it would be worth $1,100(next year dollars).  Remember that $1,100(next year dollars) = $1,000(today dollars).  That means you would not be any richer in one year from now than you are today, because next year dollars are worth less than today dollars ($.909 today dollars per next year dollar).  Over 30 years you could pay a total of $450,000 before you paid off your home mortgage, but this is not $450,000(today dollars), it is not even $450,000(next year dollars), this amount is a sum of all 360 different types of dollars, one type for each month you paid for your mortgage.

Why did I explain all this?  I will show you by example.
End of year left over earnings after paying living expenses: $2,000.
Your cash on hand: $10,000.
Your current debt: $12,000.  ($4,000 + $2,000 + $6,000).
Your debt is $6,000 at 6% per year, $2,000 at 10% per year, and $4,000 at 12% per year.  You are offered a bond from the U.S. treasury that costs $5,000 now (you must buy all of it at once), and will be worth $5,450 one year from now, or $5,940.50 two years from now (you can choose when to redeem it).  You can put your money in a bank account and get 7% per year for whatever amount you deposit in the bank.  What do you do with your money?

Scenario 1: John Cummuta says pay off your highest interest debts first, and all your debts as fast as you can.  You decide to do what he says.  You pay off the $4,000 at 12%, the $2,000 at 10%, and $4,000 of the 6% debts.  At the end of year 1 you owe $2,000 * 1.06 = $2,120.  You also have $2,000 left over at the end of the year after paying your living expenses.  You pay $2,000 of the $2,120 at 6%, leaving $120.  At the end of year 2 you owe $120 * 1.06 = $127.20 at 6%, and you have left over after living expenses $2,000 at the end of year 2.  You pay off the debt and have $1872.80 at the end of year 2.  END OF YEAR 2 SCORE = $1872.80 (no debt).

Scenario 2: You choose to pay off debt that is higher than an investment opportunity's return.  You decide that since your best investment is the $5,000 bond that pays 9% ($5,450/$5,000 = 1.09, 1.09 - 1 = .09, .09 = 9%) and your highest interest debt is 12%, that you will pay off the 12% debt entirely.  You now have $10,000 - $4,000(@ 12%) = $6,000.  You can't buy the government bond and pay off the 10% interest debt.  If you buy the bond and pay off $1,000 of the 10% debt, you will still have $1,000 at 10% and $6,000 at 6% in debt.  At the end of year 1 you will owe $1,100 on the 10% debt, $6,360 on the 6% debt, the bond will be worth $5,450 and you will have $2,000 left over after living expenses.  If you pay off the 10% debt and place the remaining $900 ($2,000 - $1,100) in your bank account, while also not cashing in the bond then at the end of year 2 you will owe $6,741.60 at 6%, you will have a bond that you must now cash in for $5,940.50, $963 in your bank account, $2,000 in money left over after paying living expenses.  END OF YEAR 2 SCORE = $2161.90 ($8903.50 in your bank account accruing interest at 7% and $5,940.50 in debt at a rate of 6%).

Comparing Scenario 2 with Scenario 1: $2161.90/$1872.80 = 1.154 or you are 15.4% wealthier if you didn't follow John Cummuta's advice.  I also left out the $510 you would have had to pay for John's system and S&H.  If you include that then you are 58.6% wealthier.

John Cummuta is praying on people who don't understand math very well and he isn't really helping them by putting another $510 into the debt category.  Someone claims to have bought this system on eBay for $20 and that it is worth every penny, save the $20 and don't buy this system at all.  In my example you can save $300 by not ever letting John Cummuta pollute your mind.

This has been a very long post but I hope it works its way up in the google search rankings so people stop getting tricked into John Cummuta's system that shows $1 of advertising makes him more than $1 from suckers.