Show me how to invest on a low to average income.

Discussion in 'Investment Strategy' started by skater, 19th Aug, 2017.

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  1. skater

    skater Well-Known Member

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    This is a bit of a challenge thread for all the high income earners to see how they would improve upon their situation if they were in the same position as many people trying to get ahead on a lowish income.

    This was a challenge I set for @eletronic_exp0430, but apparently it's too hard for him to do.

    You are married with two young children. There's been a recession & you've both been retrenched. Somehow you managed to hold onto the family home, but all your savings have been depleted. Your home is valued @ $400k, and you have $70k equity. It's a dump, and you don't live in Sydney. You don't have any family nearby to help with babysitting & the kids are not yet school age, so somebody has to be at home with them. You now have a job earning $50k after tax, so around $1k per week in the hand.

    I have used this site for reference; Cost of Living - Living Costs in Australia

    Running Costs for the Home:
    • Mortgage = $23,000 ($ 330 000 mortgage)
    • Council Rates = $1400
    • Water, Electricity, Gas total costs = $2750
    • Building Insurance ($330,000 cover) = $550
    • Contents Insurance ($89,000 cover) = $360
    • Phone, Internet, TV = $1000
    Approx A$ 29,000 a year = A$ 560 a week
    Add in Food : $250
    Transport: $150

    Total weekly expediture: $960 per week.
    Please note: There is no allowance for clothing, entertainment, gym memberships, health insurance, babysitting (daycare), alcohol or eating out.

    Please, show me how you would improve this situation.
     
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  2. moridog

    moridog Well-Known Member

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    You could reduce those food prices and possibly join some groups where stay at home parents take turns caring for one another's children. In this situation you would certainly be eligible for family assistance and subsidy cards. When my youngest was in day care sole and low income parents qualified for very low cost childcare for a day or two a week, not sure if this is still applicable. Investigate any business at all that may turn a profit, eg, I am shocked at how much a friend pays for firewood. There are designated areas close to the city when you can collect free firewood, grow vegiess, maybe a beehive, I am not on it but there are Facebook pages where stay at home parents can sell cupcakes, maybe some lawn mowing, minor home maintenance? You have to believe in your ability to survive, firstly.
     
  3. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

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    Night job for wife or husband.

    Doing something from home for wife assuming she's at home with kids - whatever skills are. Doing Babysitting.
     
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  4. jins13

    jins13 Well-Known Member

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    The only thing I can really add is:
    Food- Shop at Audi. In the Barefoot Investor forum, I've seen some families that can get away with $150 to $200 per week but not sure about the quality or the accuracy of that information.
    Market research/ additional gigs- Register with a number of market research companies and some can be completed online. I know some other people may do Uber, Uber Eats or that one where you look after someone's pet for a short time to bring in additional income.
    - Shop around for the Building and Contents if it's the cheapest on the market with the better coverage.

    Really tough and my hats off to you @skater and you'll a well regarded member in the forum.
     
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  5. ellejay

    ellejay Well-Known Member

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    Its unfortunately the way it goes on here sometimes. You'll post how you've basicall replaced your income by buying real estate and then someone will come along whose a) earning a very large salary b) partner has a multi million dollar business or c) they bought 2 places in Sydney this cycle and tell you that you should have done it their way. I just scroll right past these days :rolleyes: You've achieved financial freedom without a big leg up from your parents/partner. There's more to learn from your story than from someone who has achieved success but with a lot of external help that they conveniently forget to mention.
     
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  6. skater

    skater Well-Known Member

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    Some good ideas there. I'd also look at food costs, see if I could reduce interest rates, look at any opportunity for the stay at home parent to bring in some money.
     
  7. skater

    skater Well-Known Member

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    Haha, thankyou. Yes, I can see numerous ways to tweak this, but that's probably my 'poverty mentality'.
     
  8. skater

    skater Well-Known Member

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    Again Thankyou for the kind words. I posted this thread out of interest to see if any of the high income earners could see a light at the end of the tunnel. So far no takers.
     
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  9. moridog

    moridog Well-Known Member

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    I would not swap my previous circumstance for anything, because it taught me how to survive. When you are not solely motivated by how much money you make or how much you have to lose you can make decisions from a different perspective. Of course you have to make enough to cover your expenditure, fixed costs but discretionary costs? Let me at 'em! I'm earning more money than I ever have in my life but my habits haven't changed at all, my car hasn't , because I still vividly remember the freezer being propped shut with a broom, eating pies from the health care card shop three nights a week and selling stuff I found on the bulk pick up on Gumtree. Things will get better because you get better.
     
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  10. Ros

    Ros Active Member

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    There will be FTB subsidies that will be assisting. But amounts not sure. And with further childcare subsidies there could be benefit in putting the kids in care a couple of days (or F/T) to earn an extra wage. That would be running the numbers.
    Scenario could be turn the property into an investment and go and rent. If pay the same as receive in rent, the balance of property expenses all become deductible. Could then be entitled to rent assistance?
    Get rid of landline, who needs it?
    Go to prepaid on mobile.
    Shop around for better insurance and internet deals.
     
  11. Connor

    Connor Well-Known Member

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    c) really stands out for me. I've seen a few people who had bought a couple of Sydney properties pre current boom, made up to a cool million in equity and suddenly their gurus advising others.
    To me there's no skill in this, I don't recall anyone saying Mt Druitt would become a 600k suburb 4-5 years ago. Most simply got lucky with the timing. And congrats to anyone that did. Certainly a great thing.
    But if that's someone's record in property investing.. I don't think it it warrants any cockiness or too much self glorification.
    Anyone buying just about anywhere in Sydney over the last few years has made money.
     
    Last edited: 19th Aug, 2017
  12. ttn

    ttn Well-Known Member

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    Earn cash income on the side
    Convert garage into extra bedrooms rent out extra rooms
    Leaflets drop off
     
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  13. MTR

    MTR Well-Known Member

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    buying in rising markets is a very cool strategy, think about the investors who jumped into not one but perhaps three or four rising markets consecutively, imagine the $ they made just by using this simple strategy of timing the market.

    Is this dumb luck? or is it dumb luck that investors chose to ignore a rising market?

    Steve McK used this strategy time and time again and it worked well for him. There are other strategies that also work, many ways to skin a cat, but I would not be pooing pooing this one, easiest way to make money in a very short time frame.
     
  14. Joynz

    Joynz Well-Known Member

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    Eat home made soups and casseroles using veggies that are in season, and cut down on meat to save food costs. Don't buy take away food and always bring your own lunch. Don't buy coffees.

    When my partner was unemployed, we saved on food by living on hearty soups made using dried soup mix ( peas, lentils, barley) and veges with a bit of chicken added sometimes. Home made pasta from a bit of garlic, a couple of cans of tomatoes and whatever else is around. Only shopped at 'op shops'.

    I also found and resold bargains from the hard rubbish. I still do!

    Save on heating by using a hottie and a rug to keep warm while watching TV (still do this too!)

    Become an 'at home' child carer. This is often co-ordinated by Councils and you can look after about five kids from memory.

    I also like the ideas others have mentioned of renting out a room, delivering leaflets or evening or weekend work when the other parent gets home.
     
    Last edited: 19th Aug, 2017
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  15. ellejay

    ellejay Well-Known Member

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    Nobody is poo pooing that strategy, but did you see the words low income in the title of this thread? :p Seriously, I've seen a few deals just in the last couple of weeks I could make money on (that's just a quick look) ..slight problem in that I don't have the money to buy them...doh. Is someone gonna come back to me in 5-10 yrs and say I could have been even wealthier if I'd bought more? You have to buy what you can, when you can. You still make good money, just not as much as you could have with more resources up front.

    Look, it doesn't matter how you get there. If you make money and have enough to ditch the day job what does it matter how you did it or if you could have made more in hindsight? :D
     
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  16. MTR

    MTR Well-Known Member

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    I agree, It does not matter how you get there, as I mentioned in my post many ways to skin a cat.

    I was specifically replying to Connor and his comments.:D
     
    Last edited: 19th Aug, 2017
  17. Beelzebub

    Beelzebub Well-Known Member

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    They're screwed. The other large problem they face is how expensive it can be to be poor.

    For example, they probably won't have money to get their car serviced, it will inevitably break down costing them many times as much. They will then put this on their credit card and will probably only be able to make minimum repayments. Not being able to afford that car service has now cost $1000s. This also works on a smaller scale, when they go shopping they often will not be able to afford the bulk items which are often discounted. They will be merely looking to survive until the next pay-cheque.

    They need to read water and limit the amount of debt they are likely to rack up as much as possible until the non income earning spouse can get a job.

    The only way they can get ahead, realistically, is by concentrating on minimising how far they are going to get behind until their situation improves.
     
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  18. ellejay

    ellejay Well-Known Member

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    I know, just thought I' d stick my oar in! Buying multiple places in a rising market is a no brainer. You actually have to have the money though for the deposit, stamp, fees and be able to fund this multiple times before the market dips. You may need more financial muscle than brain muscle for this strategy :mad:
     
  19. datto

    datto Well-Known Member

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    I can't think of any legal way of getting more out of that situation.
     
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  20. Gockie

    Gockie Life is good ☺️ Premium Member

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    Buy cashflow properties!
    These days, you can easily rent out rooms to tourists, back a few years ago it was not so easy to do that. But take in a boarder or 2, look for the cashflow...

    I know a family that rents a house (under market rent). They have rented that home out for >10 years. Landlord won't upgrade carpets or allow them to paint. This family has no savings! I can suggest the parents (growm up kids) could get more substantial employment (one works part time painting, the other doesn't work), but the drive isn't there. Meanwhile the wife dreams of buying a house on the water... they are forever going to be living off government handouts.

    Congrats to people who try to get somewhere, doing it all from nothing. xx