This is the outline of the “WAVE-B Free Ride Project Plan” based upon the Dave Ramsey’s “Drive Free for Life” video / concept. The difference is I’m going to actually apply the concept to real life. The video is a concept video. This means it just faces you in the right direction. The goal is still the same just the details need to be tweeked.
Dave Ramsey Example w/ Assumptions:
- New car cost: $26,000
- Car Payment: $475 per month
- Loan Term: 6 years @ 9.6%
My Start w/ Starter Cars:
- Car A: Ramsey Rover – 2000 Ford Windstar Mini-Van with around 208,000 miles
- Car B: Green Machine – 1998 Jeep Cherokee with 230,000 miles
- Savings assigned to car: $4000
The basic breakdown I’m going to follow is:
- Save, Sell & Upgrade Stage
- Keep & Invest Stage
- Ride, Upgrade and Invest Stage
- Invest, and Rest Stage
Save, Sell & Upgrade
- Save at least $1500 for phase 1 car (this is the initial car to get you from point A to B)
- Buy at least a $1500 – $4000 value car (do due diligence on purchase) This is the phase 1 car. Of course the more I can put down the faster I can get to my goal of having a paid for nice car
- Save for 10 months a “car payment” we would normally be putting towards a car bought with borrowed money. Dave Ramsey’s video says $475 per month, we decided on at least $200 per month (knowing it will take loner to get to our goal)
- Sell phase 1 car and add the 10 month savings to purchase phase 2 car. This would be the upgraded car better than phase1 but, not at our goal yet.
- Repeat steps 3-4 until a car is purchased which is at the level we feel good driving at. (most likely at the $10,000 level.) This is the phase X car.
Keep & Invest
- Keep the Phase X car
- Ride it for the remainder of what would have been the 6 year term had we bought a car at the beginning of the project with debt, instead of buying a phase 1 car.
- Invest in a DRIP Index Mutual Fund
Ride, Upgrade & Invest
- Sell the Phase X car (hopefully to someone else as a phase 1 or 2 car for them)
- Get the cash from the Phase X car and some of the gains from the DRIP Index Mutual Fund and purchase a major upgrade car (My MUC car) The MUC car will be the one I would want to drive and not worry about the gas mileage so much, it has to still be reliable, it will be comfortable. I haven’t found my MUC yet but, I look forward to researching it and having the cash to buy it outright.
- Continue to invest in the DRIP Index Mutual Fund while I ride the MUC for an extended period (10 years)
Invest and Rest
- Take some of the DRIP Index Mutual Fund and buy other style investments like real estate or a business.
- Take some of the earnings and send to a charity that makes a difference; one that I most likely already support by this point.