Wednesday, August 10, 2016

Me in a Lamborghini!

If you haven't seen Dave Ramsey's "Free Cars for Life" video, also titled "Drive Free Retire Rich", it is definitely worth watching.

I have a few small issues with his video in today's investing environment, which I'll detail below, but overall there are some very sound principles in this video to be successful with how you manage your personal car buying system.

But first, to give some motivation for this post, I wanted to share a picture of me in my favorite of all cars, the Lamborghini Huracan. Yep, that's right, that is me. For my 30th birthday this year my wife got me the best birthday present a man can get (other than getting the actual car) - 3 laps on the track in this sweet, oh so sweet, ride: the V-10 602 horsepower Lamborghini Huracan.

Needless to say, this was a very fast and very cool experience.  So with that experience in mind, here's what I think about the Drive Free Retire Rich video and why you should watch it:

Dave's video gives a great methodology for how to avoid endless car payments and instead use your investments to purchase your vehicles in the future.  This video really gives an awesome perspective-shift away from what most Americans do when purchasing cars.

My major 'beef', however, with his video is his use of 12% investment returns (especially consistently, and over a short time horizon). Needless to say, this number is WAY too high in my opinion and it definitely will not happen year after year in order for you to follow Dave's plan exactly.  I wrote an article about lower returns here.

To give even more evidence, during my MBA at Duke in my Investments class we had the CEO of DUMAC - the Duke University Endowment, that manages $16 billion dollars in assets - come talk to our class and he recently shared that DUMAC thinks there is only a 49% chance that they'll be able to achieve a 5% real return over the next ten years. A 49% chance of getting 5%.  Think about that. Now if you think you can more than double an endowment's projected return, to be honest, you are crazy.  They have hundreds of investment professionals using advanced strategies that are way more complex than our simple dividend portfolios, and their expectations are nowhere near Dave's quoted 12%.

Ok, off my rant.  Here is a picture of my truck that I purchased back in 2010.  Short story behind this purchase is that I deployed to Afghanistan in 2009 and gave my original car, a Toyota Corolla, to my brother.  Then, when I returned home I bought this truck in 2010 out of necessity (needing a vehicle, since my brother purchased my car) and as somewhat of a gift to myself for returning home from my first deployment.

I bought this truck with about 30,000 miles on it, and you can see that it's a nice vehicle, but not upgraded or one of the fancier versions that Ford offers on the F150. In a few words, a nice, used dependable truck.  I've had it for seven years now, and don't intend on getting a new vehicle any time soon.

After some serious financial diligence, I paid my truck off near the end of 2013 and IT FEELS GREAT.  I intend to follow Dave's system and never have a car payment again! (That's the goal, at least!).  Paying for my truck for those several years when I had a car payment really made me dislike it almost.  Weird dynamic.

So, my advice to you: apply Dave's principles in this video and you'll most likely be able to have free cars for the rest of your life as well, with only a little more required savings than he suggests on your part.

And finally, another reason why you should watch this video: it's only 5 minutes and 30 seconds long. As they say at Nike, just do it.  And remember:

This video can obviously be found on YouTube as well, but I think the video quality in this version found here is a little better:  Enjoy!

And what do you think? Is your car paid for? And do you agree with Dave?

Passive Income Dude


  1. Happy 30th Birthday! Looking good in that lambo! I have no car payments and never will. Each month I set aside money for Car Fund. When I'm need to upgrade my car, I will just use the cash. It's a great filling not having any car payments from month to month. Next goal, is to get rid of mortgage.

  2. Thanks German Korb! It was a great few minutes! :) It's very cool to hear that you don't have a car payment and that you have a car fund. You are SO much farther ahead than most Americans, way to go! I would say not to be too fast in paying off the mortgage! That is good debt that you can outsource to your tenants! I plan to introduce a new 'mortgages' page in the next few weeks where I explain more. Thanks for commenting,

  3. Happy Birthday and what a sweet ride, even if it's only for a few laps!

    Going to watch Dave's video now!

    1. Thanks Divi cents. It was quite the experience. Dave's video is definitely worth the watch. It's the long term diligence to follow his concepts are what prevent so many of us from doing it. Not us though!! :)