# Small Inheritance w/fixed Income Buy a Home or a Car?



## kootenaydude (Nov 19, 2015)

A relative of mine whom lives on a very small fixed income just received a small inheritance. He was living in the family home as the caretaker of his mother, which has since past. The 5 siblings (including him) have just sold the family home and split the proceeds of the sale, leaving him sleeping on a friends couch at the age of 60 also making less than 1k/month and not able to work. My question is, with 40k from the sale of the home how should he use it to have the best outcome now and in the future. Some have suggested he rent or share rent with others and buy a reliable vehicle to get around with. Others have suggested that he purchase a 20k trailer and take in a roommate to help cover the bills, thus leaving the majority of his monthly cheque would remain his. 

Any help would be greatly appreciated.


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## carverman (Nov 8, 2010)

kootenaydude said:


> A relative of mine whom lives on a very small fixed income just received a small inheritance. He was living in the family home as the caretaker of his mother, which has since past. The 5 siblings (including him) have just sold the family home and split the proceeds of the sale, leaving him sleeping on a friends couch at the age of 60 also making less than 1k/month and not able to work. My question is, with 40k from the sale of the home how should he use it to have the best outcome now and in the future. Some have suggested he rent or share rent with others and buy a reliable vehicle to get around with. *Others have suggested that he purchase a 20k trailer and take in a roommate to help cover the bills, thus leaving the majority of his monthly cheque would remain his. *
> 
> Any help would be greatly appreciated.


 Having some experience with a travel trailer on rented lot, the 20K trailer isn't going to last much more than 10 to 15 years these days. They are made very cheaply, very thin walls and take a lot of energy to heat in the winters, depending on how cold the winters are in the location of where the trailer will be parked. 

All trailers (travel and mobile home types (which are better built) require maintenance from time to time. Roof seams leak and have to be resealed, the water system, the waste holding tanks require attention as well, and there may be local regulations for septic tanks.

Getting electricity is another problem, unless you just rely on a gas generator to run a couple of lights inside and some small appliances, as most gas generators provide about 15 amps or less. 
So don't expect to operate fridges (unless they are propane) or appliances such as space heaters or microwaves in these *without at least 30 amps of 120volt AC source*.
The only way to get this is ...either rent the lot from a camp ground year round and pay the rental fee plus taxes, or buy a piece of land, then bring in power lines to connect to the grid and install a small septic tank. This option is very expensive and could easily eat up and of the remaining $40k legacy and then require more money and he wouldn't
be finished yet. An access road from the main road could cost a few hundred or even 4-5 thousand depending on how long the access road is.

Getting clean water is another problem.
Water can be carried in large containers, not convenient, but it gets around having to drill a well (expensive!) or get running safe drinking water from a stream in the winter time.
Even a used one available at a cheaper rate, requires some maintenance. the propane furnace and refilling the propane tanks.

These are just some of the issues surrounding a trailer that you don't have when you buy a house that comes with water and sanitary plumbing and a source of heat (gas, oil or electricity).

yes, people do live year round in these trailers, but mostly in trailer parks, that charge a monthly rent for the lot, supply the electric power to the meter on your trailer, supply a clean source of water to the trailer (monthly water and sewage bills) and also provide sanitary facilities, septic tanks or pump out tanks.

In any case, its not "living for free in your own trailer" by any stretch of the imagination. $40k may not be enough to cover the initial expenses of buying it and then
finding a place to park it and bringing in the services I mentioned.

At $1,000 a month income, it doesn't leave much after he pays for:
Lot rental
clean drinking water
fuel (propane heater)
electricity
insurance on trailer (storm damage)
and local property taxes, if applicable.


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## off.by.10 (Mar 16, 2014)

First, this might be better suited for the frugality forum. Also it's hard to give you a good answer without location. How reasonable is it to get by without a car? What is the climate like? Any public transit available? What is his physical condition? At that income level, a car would be an huge money sink. There's no point in owning one if you can't afford to go anywhere. I would say: share rent close to basic services (so he can walk to the grocery store, drug store, etc) and buy a moped if extra mobility is desired in the summer. You can get a new one for about 3K and running expenses are much lower than a car. Lock it well. Keep most of the money. Pay for a taxi in the winter if there is a real need to go somewhere and there are no other reasonable options. Spend the rest of the money slowly on things he enjoys (eg. restaurant, bowling, etc).


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## humble_pie (Jun 7, 2009)

kootenay would you be able to give us a bit more information.

is the relative receiving government financial assistance. Is that the $12,000 per annum that you mentioned. Is there any way that this can be increased, until OAS & GIS kick in.

if not, then the wicket is sticky indeed. One aspect of markets today that is not helping your relative are record low interest rates. That $40k will not earn much in a safe guaranteed income account, which under the circumstances is the only place that the capital ought to go.

i can see that carverman has taken the trouble to point out, with all manner of good concrete details, how buying a trailer in order to attempt living like a hermit is not going to work out, dollarwise.

i also think that it's vital to conserve the capital.

this brings us to the family. There are 4 siblings. Might they each be able to donate $40 each month? this would increase his monthly income to something like $1,180. He'd receive a few more dollars from his $40k invested into a GIC, so altogether his monthly income might be $1,200. On that he could get by. Barely, but he could make it.

could he find a decent room to rent for $600/month. Could he find soup kitchens in the neighbourhood, think churches. He'd have to get his food budget down to $200-$260/month. He'd have to search for secondhand clothes, think church rummage sales.

i think he'd have to forget about a car.

if he smokes or drinks, best to give those up.

medical care is free, in most cities dental faculties offer free low-income dental care during the summer months.

the silver lining in the cloud is that most cities have pleasant zero-cost activities for low income seniors. He could search for a community garden to join (free vegetables,) join a seniors' music group or choir, play bridge or card games with others, go on outings with others at seniors' centres, volunteer to coach a sport for kids if he was athletic, join libraries where he can use the internet, read newspapers & see movies ... the list of wholesome low-cost activities for seniors on strict budgets is actually endless.

the silver light at the end of the tunnel is that things will get better with GIS when it kicks in.


EDIT: i'm hoping to make crystal clear that i think all of the $40,000 should be invested in a safe, guaranteed, income-paying vehicle. This means a couple of GICs (ie an abbreviated ladder). Alas the interest paid today is low, but a prudent person looking at the total picture would live with this, because of the safety of the money.

i'm going for this preserve-all-capital approach because statistically there is a possibiity that things might get worse. One can never predict the future, although one knows that it'll be a few more years until GIS.

obviously the relative was in good enough condition until recently to take care of his mother plus their house. if it were my relative, i'd be wanting to see him buffered now by keeping all his savings safely invested.

in addition, this relative is the one who has been caring for the mother, so if he were my sibling i'd gladly give him $40/month for a few years, until GIS kicks in.


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## rikk (May 28, 2012)

Well, one of my brothers in law has been living on Vancouver Island for the past maybe 15 years or so getting by on minimum wage work and renting rooms. His current room is over a garage, nicely furnished, nice view. He's what I'd call an above average tenant, helps out around the place, is out hiking and so on a lot when not at work, and is well liked by the owner. Short story, has a really nice place at an affordable cost with no ownership responsibilities.


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## humble_pie (Jun 7, 2009)

rikk said:


> Well, one of my brothers in law has been living on Vancouver Island for the past maybe 15 years or so getting by on minimum wage work and renting rooms. His current room is over a garage, nicely furnished, nice view. He's what I'd call an above average tenant, helps out around the place, is out hiking and so on a lot when not at work, and is well liked by the owner. Short story, has a really nice place at an affordable cost with no ownership responsibilities.



very creative person!


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## carverman (Nov 8, 2010)

humble_pie said:


> i can see that carverman has taken the trouble to point out, with all manner of good concrete details, how buying a trailer in order to attempt living like a hermit is not going to work out, dollarwise.
> 
> i also think that it's* vital to conserve the capital.*
> 
> ...


Well said humble. Those that are uninformed in the ways of living frugally, think that they can live very frugally in a house trailer parked somewhere..but they forget about a lot of expenses that go with parking that trailer somewhere as I explained. You can't even park it on Crown Land these days without having somebody official telling you to move it or else! The days of living out of a teepee are long gone, except for the aboriginals that can still do that on their reservations.

He will definitely NOT have enough income with $40k to buy a trailer and some sort of used vehicle. Too many expenditures with the trailer will eat up the balance of his inheritance very quickly, not to mention insurance on both the vehicle and trailer, gas, propane (need LOTs of it to heat the trailer in the winter) and repairs to the used
vehicle.

These trailers are travel trailers, with 2 inch thick walls and *very poor insulation*...ok to tow around in the summer months, or just park it at a campground that supplies the power and water/sanitary facilities from May to the end of September, then go back to your regular home to live out the winter months..or with a relative.

You cannot really winterize a travel trailer..the plumbling has to be all drained free of water in the fall, otherwise freezeup, even if you are inside during the winter, will burst your hot water tank, water lines
etc and you will freeze inside trying to stay warm.

A modular park model home is another story, they are winterized, and people do live in them in sub zero weather, BUT one cannot buy those for $40k today. 
https://www.eaglehomes.ca/parkmodels.php


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## spirit (May 9, 2009)

When I was much younger.....I bought what would be called a rooming house. I lived on the main floor and the upstairs had 3 rooms, bathroom and kitchette which was shared by 3 people....they locked up their room but shared the common space. The same in the basement. After a bit of learning curve....I made up a contract that everyone had to sign....no parties, pay rent on time etc. I owned and lived in that house for 2 years and then my husband and I managed the house after we married for 8 years. Really had very few problems but it was stressed that the people living there must abide by the rules and we kept it pretty strict....never had a problem renting rooms and had many tenants come by referral since this was a "clean" house. 
We also kept rent pretty low so we could pick and choose tenants to keep out the party animals. One of our tenants was living there when I bought the house and he was still there after we sold the house. He was an elderly man who kept to himself....a heavy smoker but we had alarms on all 3 levels and the other guys made sure he did not smoke in bed...how they did that I do not know but they sort of looked after each other. 
To be fair we did get some problem tenants but they did not last long and the other tenants were pretty good about letting us know about problems.
My point is....there are places like that....or in private homes....look in the classifieds for room rentals and be prepared to drive him around to find a good one. Make sure it is on a good bus route (; and good luck.


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## Charlie (May 20, 2011)

he shouldn't buy a car.
Look at finding supported senior housing long term, affordable housing short term. 
Four other siblings should help support him until he's 65 and OAS/GAIN kick in. Afterall...he did take care of their mom whose home they've now cashed out.


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## Sherlock (Apr 18, 2010)

I thought by trailer he meant one of these: http://www.realtor.ca/Residential/S...GEORGE-HIGHWAY-Surrey-British-Columbia-V3W4Z4

You still gotta pay rent for the land it's on but it's a very cheap way to live.


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## humble_pie (Jun 7, 2009)

Charlie said:


> he shouldn't buy a car.
> Look at finding supported senior housing long term, affordable housing short term.
> Four other siblings should help support him until he's 65 and OAS/GAIN kick in. Afterall...he did take care of their mom whose home they've now cashed out.



exactly


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## kork (Jun 9, 2012)

humble_pie said:


> exactly


The finances are tight, but there may be an opportunity for someone to "invest" in a tiny house and rent it out at a reasonable rate... Or, depending on the requirements, there's a community in Kingston looking at creating a self-sustaining community of "tiny houses" right now. http://wwppss.wix.com/smart


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## Sherlock (Apr 18, 2010)

Would it really be that bad to buy an old jalopy for a few thousand bucks? Insurance can't be that high for an older guy and gas wouldn't be high if he doesn't drive much. It would allow him to live far from public transit where housing costs are cheaper so might actually save money.


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## Itchy54 (Feb 12, 2012)

More information needed, as others have mentioned. 
Save the money! No car, no trailer. Rent a modest room in a shared house or a basement suited a walkable location (maybe a small second hand scooter if he has mobility issues, super cheap and lots of them....retirement homes are a great place to look for those). Since the house netted 200,000 it sounds like the location would be easy to find a low rent option.
Put the money in a safe high interest account. Can get 1.8% now and that would add a modest $60/ month to the present income.
$500 for rent (?), $200 for food, $100 clothes and toiletries, $100 busses or the occasional cab....$50 phone. What else might he need?
Some towns have small hotels who rent by the month. They would provide everything he might need...a bed, tv, washroom.


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## OptsyEagle (Nov 29, 2009)

Take the $40,000 and divide it by 5 to allocate $8,000 to his $12,000 per year. That makes $20,000 per year. GIS will probably guarantee an income around that level after 65 so that is the budget.

Not a lot but many people working a full week at minimum wage don't have that. He should be able to live on it. Obviously a room mate would help. Can't comment on the car since I don't have enough details but it sounds like a luxury he cannot afford.

Not wanting to be cruel, but eventually becoming 60 should not have been a surprise to him. If he wanted to live better he should have saved some money.


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## humble_pie (Jun 7, 2009)

^^

there was a clue in the first post. He's 60 but not able to work.

that's why buying a tiny house to rent out to others, needing to have roommates who will share the rent, buying an old car whose expensive repairs or even total breakdown are more likely just so he can attempt to live in isolation way out in the boondocks ... these are all too-risky ventures imho.

it's possible that this is a frail person of some sort, in which case imho we should try to protect him. There are lots of protective suggestions in this thread.


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## kork (Jun 9, 2012)

humble_pie said:


> ^^
> 
> there was a clue in the first post. He's 60 but not able to work.
> 
> ...


<thumbs up> Good point.


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## carverman (Nov 8, 2010)

Sherlock said:


> I thought by trailer he meant one of these: http://www.realtor.ca/Residential/S...GEORGE-HIGHWAY-Surrey-British-Columbia-V3W4Z4
> 
> You still gotta pay rent for the land it's on but it's a very cheap way to live.


I guess it's in the terminology. A trailer, I always thought was something you pull behind a vehicle when you go camping and visit other parts of the country. These kinds of trailers are manufactured to be as light as possible to minimize towing costs, wear on the double axle tires they come with, and other handling issues. A 30-35ft is probably the biggest you would want to pull on the highway or try parking it somewhere,. Lots of these are available new or second hand, but they are not really energy efficient in winter
months..practically no insulation in the walls, roof or the floor. 

The manufactured portable homes, as shown in the link are made to be parked in an organized permanent trailer park setting. The rents in BC seem to vary specific to the area and how close these are to the bigger centres. The rents seem to range from$340 to $558 per month, plus electricity, water and sewer, heating, insurance and more than likely municipal taxes, so that could practically double the pad rental costs. 
He could easily face monthly expenditures of (upto) $800 at least, and that is provided the unit doesn't require maintenance or any appliance or equipment replacement which would be at additional cost depending on the age of the mobile home. 
Propane heating costs would be one of the highest expenditures in the winter, as the interior of the unit and the hot water would be heated by propane.


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## carverman (Nov 8, 2010)

kork said:


> The finances are tight, but there may be an opportunity for someone to "invest" in a tiny house and rent it out at a reasonable rate... Or, depending on the requirements, there's a community in Kingston looking at creating a self-sustaining community of "tiny houses" right now. http://wwppss.wix.com/smart





> "How would your life change if you could live in your own home, on your own property, with no rent, no mortgage, very low property tax and no more overpriced utility costs, all for less than $50 per month?"


These are fully subsidized housing with a large waiting list, I'm sure. This social experiment has been tried in other areas. I think Seattle was another one.



> If you have no debt at all, and you also have 10 dollars in your wallet, then you are wealthier than 25 percent of all Canadians.


 I guess, I would fit into this category. The rest of the other 25% must have a lot of debt and empty wallets?


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## CalgaryPotato (Mar 7, 2015)

But out of those 25% that have more debt than assets, how many have future earning potential. Because I know when I finished University I fell into that negative %, but it didn't matter because I had decades of high future earning potential ahead of me.

As opposed to the gentleman talked about in this thread, who has $40K but by the sounds of it, no ability to earn any income.

As others have said, property and cars both have a lot of unexpected expenses with them, he should not be investing in either of those things in his situation.


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## spirit (May 9, 2009)

Is this person capable of managing their own finances? I was executrix of my parent's estate. Within five years one brother had misspent his 60000 inheritance. Perhaps an annuity would be a good idea to consider.


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## humble_pie (Jun 7, 2009)

spirit said:


> Is this person capable of managing their own finances? I was executrix of my parent's estate. Within five years one brother had misspent his 60000 inheritance. Perhaps an annuity would be a good idea to consider.




spirit tentatively i've been wondering almost from the get-go whether kootenaydude is not writing about himself, ie there is no relative.

you'll notice he hasn't been back. One can easily empathize that it might be difficult for him to post more details.

fortunately, a good number of compassionate messages have been posted already. Your messages are here. Charlie from vancouver suggests low-cost appropriate accommodations for now, but says get on the wait lists for subsidized senior housing. Carverman & calgary potato have weighed in with messages advising against throwing away the precious inheritance on vehicles.

an annuity might be good, although spirit you're aware that the payout for a 60-year-old will not be nearly as high as for a 75-year-old? a lot depends upon the financial self-discipline that this mysterious person possesses.


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## carverman (Nov 8, 2010)

humble_pie said:


> an annuity might be good, although spirit you're aware *that the payout for a 60-year-old will not be nearly as high as for a 75-year-old?* a lot depends upon the financial self-discipline that this mysterious person possesses.


Certainly not on a $40k inheritance set up as an annuity these days. 

The problem is that most insurance companies want to keep as much of the money invested in annuity with them when you die (no guarantee annuity), and any amount that is guaranteed will be for a specific period of years, after which... becomes..."good luck to you"..we've paid out what we had to according to the annuity contract.

Having researched that myself, (in case I need to sell my house in future years and invest at least $150k or more in an annuity, for 10 years), I would be getting a little over $1,000 a month.

That means 120 payments of $12,000 x 10 years...after that is it..again "nice knowing you". Sure there are annuities that may pay up to your death, but they are not going to be paying as much as the fixed period annuties,* because no insurance company is willing to pay out more than what they got from you in the first place*. They would
go broke and they are in there for a profit, not a loss.

However, if he reaches 65, he can apply for OAS and CPP disability (he can also apply for CPP disabilty earlier than 65 with doctors reports that he is unable to work).
Once he has a gov't income, he may also qualify for GIS.


I'm not sure how social assistance will come into play at that point, since social assistance will examine his income and assets quite thoroughly before allowing him to continue to be on social assistance which has benefits such as dental, subsidized housing and electricity, bus passes, and other benefits that the rest of us taxpayers are not priviledge to 
have. 

With no further details on "his" situation, it is difficult to discuss anything significant to his case..but from what I have been able to glean so far from the comments on the OP, "he" doesn't
seem to be in any position financially to own a vehicle or some kind of dwelling and needs to get his name onto the social housing list ASAP, if he already hasn't.


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