Personal Finance

Building equity on minimum wage.

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  • Jun 18th, 2015 10:48 am
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Member
Oct 16, 2010
309 posts
163 upvotes
Toronto

Building equity on minimum wage.

Assuming its possible, how would you do it? Since many people on this forum pride themselves on astute financial sense and frugality, I'd really like to hear how you would attempt to do this. Perhaps the following hypothetical scenario will motivate you:

Suppose you lose your job and a great accident befalls you that now makes you incompetent in your current profession, and you also love your home as well all other investments. With little alternative other than working a low-wage, low-skill job, how would you go about building equity? Are any of you frugal enough to live on the minimum wage and stash a sizable chunk away as savings?

For those who admittedly can't, what salary do you think is the lowest you can live on while building equity (albeit at a very slow rate)?
41 replies
Deal Addict
Jul 21, 2011
1731 posts
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RMB
^That's what mom and dad are for.
Deal Addict
Jan 2, 2015
1633 posts
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Toronto, ON
I think this assumes you already had a house you could afford, have not finished paying the mortgage, and now things went terribly. I think this also assumes you're a singleton, because if you're married, one person working at a decent job might be able to keep things going. (Alternatively, the same thing happens to both spouses!)

No, I don't think that's possible. When I worked minimum wage, I was lucky to save $300 per month, and that was as a singleton living in a tiny apartment with my mom. There's no way you're going to get a mortgage as cheap as a half of crummy apartment. In that situation, loving the house or not, it wouldn't be sustainable to keep it. I'd sell the house and move into the cheapest possible apartment. When you have trouble putting food on the table, luxuries have to go, and I would consider a detached house that I can't afford to be a luxury when there are cheaper options available.

At least in Toronto, some households could not survive on that kind of income. That would be any household with kids, or someone with a serious medical condition, etc.

This might be possible outside of Toronto, but I don't think it would be wise. People get emotionally invested in their houses, so when they need to sell they'll spend several months burning through their money, desperately holding on to the house, and when they finally sell it they may be in serious debt if it was sold at a loss.
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Oct 26, 2003
39343 posts
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Winnipeg
i know it can be done, one of my parent's first landlords made minimum wage and bought a house and rented to university students, they were so frugal that one family member slept on the sofa in the living room just so they could rent another room out, it was not glamorous but you can do most things in this country if you are hell bent on it.
Deal Addict
Jun 27, 2005
1071 posts
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Toronto, ON
In this scenario, am I single? married or with a family? It makes a huge difference.

Also, do I own a home (with a mortgage) or am I currently renting.

This is possible if you are single + renting and possibly married (significant other not working) + renting, but all other scenarios I would say not realistic.

If I owned a home, in order to do this, you would need to sell. Probably would be hard pressed to keep the home anyways on minimum wage, unless you've already paid down a significant amount and can re-mortgage.
Member
Oct 16, 2010
309 posts
163 upvotes
Toronto
FoFai2015 wrote: I think this assumes you already had a house you could afford, have not finished paying the mortgage, and now things went terribly. I think this also assumes you're a singleton, because if you're married, one person working at a decent job might be able to keep things going. (Alternatively, the same thing happens to both spouses!)
I think you're over complicating things. I was trying to construct a hypothetical scenario where you completely lose your house (i.e foreclosure) and any investment into it went down the drain. Also, for added simplicity, let's assume you have no independents nor a significant other.

Basically imagine a scenario where you are starting from a financial rock bottom and your current income sources are no longer viable. How would you build equity living only on the minimum wage? And to make things interesting, let's assume you're either in Toronto or Vancouver.
Newbie
Jan 31, 2015
14 posts
2 upvotes
NS
If you're willing to live a minimalist life it's doable.
You're take home income after deductions is somewhere in the range of 18300 assuming 40 hours and 10.25 rate.
Get a cheap appartment, http://www.kijiji.ca/b-apartments-condo ... d=offering several in the 600 range
And I'm sure this job can be walking/biking distance to your appt, maybe public transport if needed on occasion(which can be claimed on taxes)
If you're careful utilities could come in 70 or less per month, 60 for internet, 250 food, and 50 for a phone.
So we have 495 positive cash flow, knock a hundred off for entertainment so lets call it 400 is what you have to work with.
Assuming you manage 6% a year for 5 years with some blue chip stock paying dividends will get you 28047 saved, all in a tfsa of course so non taxable.

Of course, if you have no wife, no dependents, just save a year and go to community college for a trade or something.
Hell, go work at a grocery store, be willing to move, and try to be good at your job. In 5 years you could move into management for a department and 40k yearly.
Penalty Box
Mar 27, 2004
10493 posts
9009 upvotes
Toronto
not in Toronto. Maybe Oshawa.
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Jan 14, 2009
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Work 7 days a week for as many hours as you can - some people do in Vancouver.
Deal Addict
Jun 27, 2005
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Toronto, ON
zakarydoks wrote: Work 7 days a week for as many hours as you can - some people do in Vancouver.
^ work longer hours, rent a room like a student and hope your pay eventually goes up a little
Deal Addict
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Nov 13, 2003
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SASKABUSH
you could do it in SK IF you were getting 40 hrs a week, could easily walk to work and either lived with your parents (paying a reasonable amount for rent)

10.20/hr is the min here but most work places pay more then that (Even BK paid 25-50 cents more then the min wage)
our work place offers $14/hr starting wage, you would easily walk to work (Small town) highest right now production is making is $15 (supervisors make $18) good benefit program , you can take home as much left over salad as you can carry (we toss stuff out daily and our crystal meth addict takes it home all the time and he's still alive) full time right now (I did 2 hrs OT last night myself) weekends off .... rents in town are bad though cus its a mining town (they ask $1000/month for just a room, nothing else with it) not sure what the apt block rents for, but I have seen a full house rent for $1100/month here. We also get a heck of a boozed up Christmas party LOL

please apply, we're so short staffed that our production supervisor, our plant manager, our Q & A and the secretary are all working the production floor!!!
Sr. Member
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Jul 10, 2013
604 posts
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Toronto
I am building equity every month on less than minimum wage.

Rent out your primary residence.

Move to city/country with cheap cost of living.
Sr. Member
Dec 19, 2010
671 posts
5147 upvotes
Vancouver
attire wrote: Assuming its possible, how would you do it? Since many people on this forum pride themselves on astute financial sense and frugality, I'd really like to hear how you would attempt to do this. Perhaps the following hypothetical scenario will motivate you:

Suppose you lose your job and a great accident befalls you that now makes you incompetent in your current profession, and you also love your home as well all other investments. With little alternative other than working a low-wage, low-skill job, how would you go about building equity? Are any of you frugal enough to live on the minimum wage and stash a sizable chunk away as savings?

For those who admittedly can't, what salary do you think is the lowest you can live on while building equity (albeit at a very slow rate)?
First of all, You CAN do it! Believe it! I'd start by spending the next few days reading from start to finish of this blog. Take what you want and discard the rest but MMM lays it out to be possible, and is entertaining. http://www.mrmoneymustache.com/2013/02/ ... blog-post/
Deal Fanatic
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Apr 11, 2008
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Ok, let's see. Minimum wage. That's $11 a hour.

Work 40 hours a week, 52 weeks a year, that's $22,880.

Shared basement apartment: $350/month
Food: Instance noodle, 5/$1, so $30/month if you eat a lot. Ok, I will give you $100/month.
Bus: $100/month
Clothes: Sales at value village, $10/month.
Everything else: $40/month.

That's $350+$100+$100+$10+$40=$600/month or $7200 a year.

Saving of $15,680 a year. S&P 500 has a 25 years total return of 9.62% You save from 22 to 65, that's 44 years.

You will have $10M when you retire. Congratulation!
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Nov 2, 2013
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Edmonton, AB
Oh just do it the Vancouver and Toronto way. Ask your parents to buy you a car, condo, and pay off your student loan. So you can go to school for 5 years for a useless degree or call Starbucks your career, then come out to make $15 an hour and have almost 0 ambition. Effectively your min or close to min. wage job is entirely your personal savings or spending money, but you're always a manchild.

On a serious note, if you live frugally enough, in theory you can, even in places like GTA/GVA, without asking your parents.

If you net about 1800/month,

- rent a room for 550
- groceries spend about 250
- phone plan for about 50
- transit pass for around 100
- random expenses for another 100
- clothing for 50

In 10 years, have $84k. Use as downpayment for some 3 br place, then rent out 2 rooms for 500-600 ea to cover your mortgage payment and build equity.

Eventually you will do well.
Accountant (Public Practice)
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Jan 27, 2004
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divx wrote: i know it can be done, one of my parent's first landlords made minimum wage and bought a house and rented to university students, they were so frugal that one family member slept on the sofa in the living room just so they could rent another room out, it was not glamorous but you can do most things in this country if you are hell bent on it.
That works. I also known some people who bought houses using other peoples credit.
They end up doing the same... Except they create a illegal rooming house. Again... Not glamorous but lucrative.
Buy duplex... Live in smallest unit. Rent out as many bedrooms as possible... partition 2 bedrooms in the basement, partition 2 bedrooms in the living room.

BAM. 7 bedrooms. Rent it out to 7 bums @ $550/month...
Thats $3850/month. Enough to cover the mortgage and then some.

Just have to put up with the crack heads and bums who end up living there.
Deal Expert
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Oct 26, 2003
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Winnipeg
UrbanPoet wrote: That works. I also known some people who bought houses using other peoples credit.
They end up doing the same... Except they create a illegal rooming house. Again... Not glamorous but lucrative.
Buy duplex... Live in smallest unit. Rent out as many bedrooms as possible... partition 2 bedrooms in the basement, partition 2 bedrooms in the living room.

BAM. 7 bedrooms. Rent it out to 7 bums @ $550/month...
Thats $3850/month. Enough to cover the mortgage and then some.

Just have to put up with the crack heads and bums who end up living there.
and i would have put up with it when i was a poor student
Sr. Member
Mar 3, 2015
699 posts
95 upvotes
Scarborough, ON
i use to be on welfare (odsp) and earn $1475 and no job.

yet live comfortable!
let me break down how i save $500 a month for every 6 months and buy nice stuff like tablets, ps3, nice led tv or air conditioning for rainy spending every after 6 months.

bachelor tchc apartment rent $479
phone bill = $20 chatr plan
cable = $65
Internet = $12
Groceries (no take out or tims) $200
Clothing, Grooming & Hygene = $100
Transportation (tokens) = $50
Miscellaneous = $50

surpluss? = $500

just save for fun, no eating or drinking outside to enrich others!

and cut booze to friday every 2 weeks and if you smoke than buy mohawk ones! lol
Deal Expert
Aug 2, 2004
38395 posts
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Why do you have to accept minimum wage?

If you make minimum wage, I would not spend my time trying to build equity. I would live as frugal as possible, but I would concentrate all my efforts on finding a better job earning more money.
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Nov 2, 2013
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Gee wrote: Why do you have to accept minimum wage?

If you make minimum wage, I would not spend my time trying to build equity. I would live as frugal as possible, but I would concentrate all my efforts on finding a better job earning more money.
It's a common Asian problem (considering it's a common demographic on this forum). Penny smart, dollar foolish, even at wages a bit above minimum.

Great at saving money and being futuristic, but sometimes I question the logic behind driving half an hour to the other grocer to save $1 on a pack of meat or waiting an hour at Costco to save 2-3 cents a litre on fuel when you could have just picked another career or just work a second job. Or, look at investments that are not a savings account or GIC.

Though I don't work in my field of study, on many days I'm glad I studied economics and finance in university.
Accountant (Public Practice)

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