Aside from the horribly optimistic interest rate projections in the "Drive Free, Retire Rich" video, is this a plausible way to deal with auto expenses over one's lifetime?
The basic plan is:
- get off the treadmill of buying a new car on credit every six years
- don't trade your old car for a new car; instead:
- save money for a year until you can buy a slightly better used car
- do the same next year and you will have a reasonable used car and no debt
- save all the money you would have spent on car payments compound in a mutual fund
- withdraw from this fund every six years and you'll have a new car "for free"
- after 30 years the fund will reach a million dollars
With the assumptions:
- 12% after-tax average return on mutual fund investment
- saving the US average monthly car payment of $425