Hello ~ I've posted before and received some great ideas and feedback.  I would like to post my plan for my basement and get your feedback on what you think.  I have the option to purchase some used unfaced 3 inch EPS board (2 ft x 8 ft).  My basement ledge area is not insulated.  I was thinking of cutting notches for my floor joists and just sticking the foam board to the wall covering the area at the top of the foundation to the basement ceiling.

This will leave a void area at the top of the foundation approximately 8 inches by 8 inches by 10 inches (see hand diagram below).  Does this seem like an acceptable idea?  Should I fill in the void with some fiberglass insulation?  I do have a damp basement so am concerned about adding the fiberglass insulation especially behind a rigid board (where I can't see it). 

I do plan on cleaning and using the spray foam in a can to seal any possible infiltration points.

The insulation will cover the ledge space as well as approximately a foot below grade.  For now I would leave the rest uninsulated.  Do you see a problem with that? 

I understand from this site that people cut the foam board to fit into the voids, maybe that is better?  Thanks for your time - sorry about the hand sketch, I know most of you put this in a computer and get a more finished diagram.

It's probably less cutting (but more pieces) to go ahead and cut a piece that fits up flat against the band joist, then another to lie flat atop the foundation sill to come back & meet the flat piece you're applying to the wall than to try & cut in all of those notches with reasonable precision. Both the piece against the band joist and the piece against the sill will be the same width, and are probably reasonably consitent from joist to joist, so you can just rip a piece that width (maybe 1/2" narrower than that width), and cut them to length as you go, then foam them in place with the gap you've allowed. Then putting the foundation bits up against the one over the sill plate & foaming that seam will be dead-easy.

You may still end up with a small cavity under the insulation between the sill plate and the foam on the wall, but it'll be much smaller. But you'll end up with the bottom plate/flooring of the wall above being inside rather than outside the insulation, and less prone to mold/rot since it's warmer, and at the same humidity as the basement.

Thanks for the feedback. I will cut them to fit into the area. It won't be too much extra work (if any).

Your idea is god, but is it cost-efficient and practical? How long will it take to get it done? Anyway, your idea seems good for your basement. Good luck.