Paying Your Car Note with Mortgage REITs: It’s Time to Pay Your Bills with Dividends

I hate having a car note; I hate it with a passion. However, the Marine Corps placed me in a bind, and I had to purchase a used car on the fly (in 2022).

Luckily, I have my trusty dividend portfolio to assist me in making this payment. The magic of income investing is you can use the cash flow from assets how you choose.

Today, I want to discuss how you can pay for your car note entirely from dividends—even if your car is super expensive. However, you will need to exercise restraint in your budget to acquire your assets in the first place.

If you love cars, I’ll give you the game on purchasing whatever car you want. Even better, your assets will fund your purchase. We live in an amazing time where everyone can invest for dividends. Let’s begin.

Is Owning Multiple Homes Difficult?

My hatred toward car payments. I bought my first car in Pensacola, Florida in the year 2000. I was a 19-year-old Marine with no credit history. Needless to say, I was raked over the coals in the dealership.

However, the dealers were honest brokers. They said I could refinance my 17% interest rate car loan in a couple of years, which I did. My friend wrecked my car in 2001 and left me with a small car payment without a car.

Ever since then, I have hated car payments. I got married in 2006 to my lovely wife. In 2007, I bought her a 2001 Ford Taurus for $3,800 in cash. In 2008, I bought myself a 2002 Ford Escort ZX for $2,800 in cash. We kept these cars until we went to Japan in 2014.

In 2022, I received orders to San Diego, California, but my wife and kids stayed in Pensacola, Florida because this was my last duty station. I bought a 2016 Ford Ford to use in San Diego, leaving my wife with two cars: a 2011 Mazda CX-9 and a 20112 Ford Focus.

All this is to say, I currently have three cars: a 2011 Mazda CX-9 (paid-off), a 2012 Ford Focus (paid-off), and a 2016 Ford Focus ($8,800 remaining).

Income to the Moon

I’ll pay off the 2016 Ford Focus next year (2026), and I won’t have a car payment for at least four to five years; I am through with them.

I went through this boring car history because my wife and I have only had five cars over a 19-year marriage. This has allowed us to amass a large investment portfolio.

Cars are not assets. Car payments aren’t bad necessarily because of the interest, but because cars are not assets. I live and die by Robert Kiyosaki’s definition of an asset.

He says that assets put money in your pocket, while liabilities take money from your pockets. Cars are definitely liabilities.

Therefore, if you keep recycling your car payments throughout your lifetime, you stand to miss a lot of compound growth.

I wrote about this scenario in “New Car Payments vs. Income Investing.” I understand that Americans need a car because of the proximity to work and shopping.

Ride the Recession with a HYSA

However, we must be smarter than the average bear. If you pay off a car in four years, but keep it for ten years, you can save and invest six years of payments.

Compounding is the eighth wonder of the world, but having a renewing car payment can prevent you from building a massive investment portfolio that leverages compounding.

Mortgage REITs to the rescue. Let’s say you pay off your car and keep it for another ten years, what will you do with the money?

I use the money to invest for income; I am a hardcore income investor. I invest purely to earn a return on my money through dividends.

I use six types of income investing, with Mortgage Real Estate Investment Trusts being one of my favorites.

The Biggest Book on Passive Income Ever 3!

Mortgage REITs don’t own properties, they own mortgage paper. If you are paying for your home through a mortgage, your loan is likely held in a Mortgage-Backed Security (MBS). 

Mortgage REITs purchase MBS to collect interest and principal from homeowners. They have complex systems to ensure they use as much leverage as possible, to generate high amounts of dividends.

Leverage is a two-edged sword; it’s great in good times and terrible in bad times. Because MBS act like bonds, they are extremely sensitive to prevailing interest rates.

Essentially, Mortgage REITs are the best way for the average investor to invest in MBS. However, they trade against the Federal Funds Rate and Treasury Bonds.

This means that Mortgage REITs don’t grow like normal stocks, they trade more like bonds. You’ll look at a price chart and see that the mREIT’s price has stayed flat for ten to fifteen years.

Don’t Gamble with Retirement 9

However, when you look at total returns (that include dividends), the number can be almost as high as the S&P 500. This is because mREITs produce 10-15% annual yields.

Mortgage REITs are not for everyone; you must know what you are getting. I love them because I understand how bonds operate. If you want to learn about bonds, read “The Bond Book.”

Here is a picture of my favorite mortgage investment AGNC (AGNC). I have invested $11,791, with a 1.5% loss over the years. 

However, I have collected $2,848 in dividends through the years. Therefore, my return today is closer to 24% versus the S&P 500’s 100% (over the last five years).

LBYM: Living Below Your Means

If bonds recover during the interest rate reduction period, my total return will skyrocket. But, let’s review how you can participate in this amazing opportunity.

The key to paying your car note. The key to paying your car note with Mortgage REITs is to over-invest regularly. This means you must sacrifice to get as much money into mREITs as possible.

My Cash App AGNC position pays me $133/month. Let’s say I want to get that number to $500/month. I need to invest $50,000 at 12% to receive $500/money from AGNC.

That’s right; you can purchase a car outright for $50,000. So, you must ask yourself a tough question.

Do you save $50,000 to purchase a new car, or invest $50,000 that can fund your car payments for the rest of your life?

Santa’s Bringing Dividend Growth Stocks

It’s a tough call, but I will tell you what I did. I invested as much money as possible and now earn $2,400/month in dividends.

I make enough money from dividends, at age 44 to pay for two cars for the rest of my life. I can purchase a $100,000 car (with a $1,887 payment) and not worry about it.

So, who do you want to be, the person with the big car payment, or the one with the big portfolio? Most people want the car upfront.

Conclusion. I am not here to choose for you; I can only speak from my experience. I love to be (almost) free of car payments.

Build a $1,000 Emergency Fund in 10 Steps

I love visiting my college campus and seeing everyone driving better, nicer, and newer cars than my 2011 Mazda CX-9. I love it!

I am financially free, which few people in this country will ever achieve. It started with my refusal to keep a recurring lifelong car payment.

Once I freed myself of car payments, I saved and invested as much cash flow as possible into my brokerage account—converting cash into cash flow.

Now, my wife and I are close to having $400,000 in the bank and have massive amounts of cash flow from dividends coming in monthly.

If you love cars, have your dividends pay for them. Don’t fall into the trap of paying for your car with money from your job. This will tie you to your job forever. Good Luck!

1. PDF of the Month: Don’t Gamble with Retirement 13 (Free 460-Page PDF)
2. Free PDF Downloads: Download FREE PDF LIST here
3. Financial Mindset: Become CEO of Yourself 2 (Free 196-Page PDF)
4. Retirement Planning: Your Retirement Planning Guide 2 (Free 255-Page PDF)
5. Investing: How We Plan to Retire on Dividends 4 (Free 139-Page PDF)
6. Cryptocurrencies: Counting on Crypto 2 (Free 159-Page PDF)
7. Real Estate: Financial Independence through Real Estate 4 (Free 112-Page PDF)
8. Business: Retire Rich, Retire Comfortable with a Business 4 (Free 149-Page PDF)
9. Latest DGWR: Don’t Gamble with Retirement 11 (Free 410-Page PDF)
10. Everything!: The Biggest Book on Passive Income Ever 4! (book)(Web Edition)(Art Edition)
11. Writer’s Comparison: M1 Macbook Air vs. GalaxyBook3 Pro 360
12. Read My Books for Free: Free Kindle Books Schedule
13. Book Design: Design Tips on YouTube
14. Kindle Unlimited: Why I Finally Subscribed Kindle Unlimited (learn more)
15. Book Reviews: 505 Takeaways from 101 Books (pdf)
16. Writing: The Publishing Chronicles (Part 1, Part 2, Part 3, Part 4, Part 5)
17. Best REIT- Fundrise: Fundrise vs. US Treasuries (Join Fundrise)
18. Follow us: On our Facebook Page and Join our Facebook Group
19. Support the Channel on Cash App: $Kingmarine1981
20. For more detailed analysis, join my Youtube: MFI YouTube Channel

PDF of the Month: Don’t Gamble with Retirement 12 (Free 460-Page PDF)

Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it.  I have no business relationship with any company whose stock is mentioned in this article. All Right Reserved Military Family Investing