Dave Ramsey: Get Free Cars for Life

The complete FREE CAR PLAN can be found here

Dave Ramsey's Total Money Makeover Program

This is a six year plan thats starts with a person who is at the end of their current loan/lease.

What many people do:
1/3 of car buyers sign up for a six year loan at an avg of 9.6% interest and avg price of $26,000. That makes for a pymt of $475/mo for six years.

After those six years, you've paid over $33,000 in car payments for a $26,000 car that is now worth only about $6,000. At this point most people would go out and buy another new car and REPEAT the cycle. So they always have a car payment.

Dave Ramsey's Free Car Plan:
Step 1: Starting from the point of just paying off your loan and having a car worth approx 1500. Instead of going out to buy a new car with a pymt of $475/mo like in the example above, pay yourself the $475 payments to a savings account for 10 months. After 10 months you'll have $4750 saved + $1500 that your car is worth. With this $6250 (in only 10 months) you can pay CASH for a good used car and you don't owe anyone anything for it.

Step 2: Continue making payments to yourself (saving) $475 mo for another 10 months and you'll have another $4750. You'll probably be able to sell the car you just bought 10 months ago for about the same price you paid for it ($6250). Add these together and you can go PAY CASH for an $11,000 car in just 20 months from the staring point of the plan. At this point you're 20 months into the plan, with an $11K car that you BOUGHT WITH CASH.

Step 3: Continue to carry out payments to yourself for the remainder of the six years (52 more months), but invest these monthly payments into a good mutual fund that avg 12% returns, and you'll have $32,000 at the end of the six year plan. If you'd have bought that new car with the $475 pymts six years ago you'd just be paying off your loan with $0 in savings for another car.

Step 4: Here's where the FREE cars come in. If at this point you go buy a car with CASH for $12,000 from your car fund, you'd still have $20,000 left in there. This $20,000 will continue to earn interest at 12%. You'd be able to use that interest money to buy with CASH a $14,000-$18,000 car EVERY FIVE YEARS for the rest of your life without adding any more money to the car fund.

Step 5: If you chose to continue investing that $475 every month that you're NOT spending on car payments and earn on avg 12% on that money, you'd have over $100,000 in ten years. At twenty years, you'd have about $470,000. After 30 years, you'd have $1.6 Million. After 40 years, you'd have socked away $5.5 million!!!

Or you can just keep paying $475 for a new car payment and never break the cycle.

I've created a table to show an example of how a 2 car family can save their way to FREE CARS FOR LIFE by saving $500 per month and paying cash for their cars. The table assumes that the family will keep the car 10 years; replacing one car every 5 years. After 15 years, the interest being earned on their savings (10%) will pay for NEW CARS for the rest of their lives!!!! The other option....keep making car payments until it's finally paid off. Then go out and buy a new car and keep making car payments....month after month after month.

Don't think your car will last 10 years? The numbers are about the same if the family wants to replace the cars every 8 years (one car every 4 years), by simply increasing the monthly savings to $600.

Year

Annual Contribution

Total Contr & Interest (10%)

Car Purchase Price

1

$6000.00

$6282.00

none

2

$6000.00

$13233.00

none

3

$6000.00

$20890.00

none

4

$6000.00

$29361.00

none

5

$6000.00

$38718.00

$20000.00 Car

-

-

$18718.00

remaining balance

6

$6000.00

$26960.00

none

7

$6000.00

$36066.00

none

8

$6000.00

$46126.00

none

9

$6000.00

$57238.00

none

10

$6000.00

$69515.00

$22000.00 Car

-

-

$47515.00

remaining balance

Year

Annual Contribution

Total Contr & Interest (10%)

Car Purchase Price

11

$6000.00

$58773.00

none

12

$6000.00

$71210.00

none

13

$6000.00

$84949.00

none

14

$6000.00

$100127.00

none

15

$6000.00

$116895.00

$25000.00 Car

-

-

$91895.00

remaining balance

16

No More Contributions

$101517.00

none

17

$0

$112147.00

none

18

$0

$123891.00

none

19

$0

$136864.00

none

20

$0

$151195.00

$30000.00 Car

-

-

$121195.00

remaining balance

Year

Annual Contribution

Total Contr & Interest (10%)

Car Purchase Price

21

$0

$133885.00

none

22

$0

$147905.00

none

23

$0

$163392.00

none

24

$0

$180502.00

none

25

$0

$199403.00

$35000.00 Car

-

-

$164403.00

remaining balance

26

$0

$181618.00

none

27

$0

$200635.00

none

28

$0

$221645.00

none

29

$0

$244854.00

none

30

$0

$270493.00

$40000.00 Car

-

-

$230493.00

remaining balance

Balance

Continues

to

Grow

You

Keep

Getting

FREE CARS

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