Just how small?  Will you have an extra bedroom for your shop or will you be doing woodworking in your living room?  Do you have to put the projects and tools away every time you want to entertain or will you leave everything set up all the time?  A while back FWW had a video tour of a shop in Japan that was smaller than small.  I'll try to find it and get back.  Found it...  shows what can be done in a small space but this shop was not on a small budget so no help there.
My name is Marc Spagnuolo and welcome to my channel. I am a podcaster, video producer, author, and woodworking enthusiast. I have contributed articles and video content to FineWoodworking.com, Popular Woodworking Magazine and WOOD Magazine. Producing the Wood Whisperer is a great way for me to combine four of my passions: woodworking, technology, education, and humor. I believe that even the most complicated woodworking project is just a series of steps. My goal with this channel is to show you the tools and techniques you need to perform those steps.
Non-Standard Miter Slots - This one is a downer.  One of the primary advantages of having a table saw is access to jigs that expand the saws functionality.  This is a major issue if you plan on buying after market jigs.  Given that we are limiting the cost of this buildout to $500, I am guessing that after market jigs are probably low on the priority list.  Your going to want jigs once you start researching what they enable you to do, my advice is to build your own - there are plenty of plans online.  
Birch comes in two varieties: yellow and white. Yellow birch is a pale yellow-to-white wood with reddish-brown heartwood, whereas white birch has a whiter color that resembles maple. Birch is readily available and less expensive than many other hardwoods. Birch is stable and easy to work with. However, it’s hard to stain because it can get blotchy, so it is generally preferred to paint Birch. 

This is the one tool in the shop that provides the greatest opportunity to save money, if you are willing to purchase a well made, light duty machine, and take lighter cuts. In the past I have used General 14" planers that can hog off seri­ous cuts all day long. The problem is that these professional units cost over $5000, and they would crush my buddy as we haul them down the stairs (note: don’t be the guy on the bot­tom). After doing a fair amount of research, I purchased the Dewalt DW735 13" thick­ness planer. The unit came with a good manual, and was in a good state of tune. It is light enough for me to carry around the shop with­out excessive grunting, so that made it very simple to install. The planer has a sig­nificant internal fan-assisted chip ejection system. The chips are catapulted out of this planer, so have your dust collector running before you run stock through it. I now have to make more cuts at a lighter cut depth, but I saved about $4500, which makes my budget happy. The planer makes clean cuts, and has two speeds. I don’t see a reason for the two speeds for my type of work, but there is a faster feed rate should you choose to use it. Knife changing is simple and quick.
Some DIY woodworking projects are too intimidating to even attempt because you don't think of yourself as a master woodworker. Backyard Woodworking dubs itself as the YouTube channel for the average guy. The channel takes you through simple projects you can do today, projects like a piggy bank, a birdhouse and a heart box—which is apparently the perfect gift for your sweetie!
Woodworker’s Hardware is your one-stop online woodworker’s store for all of your woodworker's supplies.  Shop for everything you need to start and finish your woodworking projects.  Find a huge selection of hardware products including drawer slides, barn door hardware, lazy susans, kitchen cabinet hardware & accessories, and furniture hardware.  We stock thousands of door and cabinet hardware and accessories like knobs, pulls, and hooks for kitchens, bathrooms, and closets. As one of the leading online kitchen cabinet hardware suppliers, shop for soft-close ball bearing drawer slides from top-rated brands like KV and Blum. Check out our sales page for our best offers! Our fully stocked warehouse full of woodworker’s supplies ensures shipping in 24 business hours.

@jayemel: tempered glass works perfectly, as the (theoretical) fluctuations in flatness as a result of inner stress are several orders of magnitude smaller than the significant variations of thickness of your sandpaper. Unless you want to reflect the light of distant galaxies off the bevel of your chisel and measure their red-shift, you will be fine (and safer) to use tempered glass.
The most commonly purchased claw hammer is the 20 oz. size. It’s heavy enough to easily drive nails but easily manipulated when pulling nails. While wooden handles are picturesque, they may not stand up to the strain if you have to pull a lot of nails. Hammers with a steel handle, or even fiberglass, will be stronger. However, these won’t absorb the vibrations from driving nails the way a hickory handle will. You’ll also need to make sure the fiberglass and metal handles have a rubberized grip for control and comfort. If you’re going to be driving a lot of nails, the wooden handled hammer will be better for reducing stress on your hand, and wrist, too.
You need an out-feed table to support work exiting the table saw and band saw. By placing the tools close together, I was able to make one out-feed table that works for both tools. I put four pivoting wheels on the table, allowing me to shift the table in any direction. By placing a shelf below the table, I gained some much needed storage space for portable power tools. Finally, since this is a large work surface, the table also serves as a true, flat assembly table.

Ok, the leap from $1,000 to $2,500 is a big one.  I certainly didn't make it at one time.  It took me years.  But I know folks that decided they wanted to get into woodworking and dropped at least $2,500 getting themselves outfitted.  When you do make the jump, the thought process becomes much less about making sure you can get the job done and becomes more about having quality tools to get the job done.

This is the one tool in the shop that provides the greatest opportunity to save money, if you are willing to purchase a well made, light duty machine, and take lighter cuts. In the past I have used General 14" planers that can hog off seri­ous cuts all day long. The problem is that these professional units cost over $5000, and they would crush my buddy as we haul them down the stairs (note: don’t be the guy on the bot­tom). After doing a fair amount of research, I purchased the Dewalt DW735 13" thick­ness planer. The unit came with a good manual, and was in a good state of tune. It is light enough for me to carry around the shop with­out excessive grunting, so that made it very simple to install. The planer has a sig­nificant internal fan-assisted chip ejection system. The chips are catapulted out of this planer, so have your dust collector running before you run stock through it. I now have to make more cuts at a lighter cut depth, but I saved about $4500, which makes my budget happy. The planer makes clean cuts, and has two speeds. I don’t see a reason for the two speeds for my type of work, but there is a faster feed rate should you choose to use it. Knife changing is simple and quick.
I added an accessory mitre gauge to the saw for accurate cut-off work. The Incra Miter1000 showed up under the Christmas tree after the Lee Valley flyer photo with part number mysteri­ously ended up on the fridge door with a circle around it last December. A great addition, the Incra is light, accurate, and provides adjustable stops for cutting multiple parts to precise length. I will also make a plywood cut-off sled for the saw for squaring larger panels.
Before I give you my list, I am assuming (and yes, I know what assuming does) that you already have a tape measure, screwdriver and a hammer. These are common household items that most people (woodworkers or not) keep around the house.  If you don’t have one, they are a few bucks each and WELL worth the investment.  AND they are my favorite types of stocking stuffers—even if it is just July, it’s already on my mind 🙂

"Woodworker's Supply, Inc. failed to properly investigate these complaints and failed to protect Ms. [Teresa] Logsdon from illegal sexual harassment, and gender discrimination in the workplace," according to the complaint filed by her attorney Wendy Owens of Casper in July. "Ultimately, Ms. Logsdon had no choice but to give notice of resignation to protect herself."
Frank Howarth is a unique guy - educated as an architect, but with practical woodworking skills to rival any journeyman.  He has the most enviable workshop of anybody I've seen, and his projects are aspirational on every level - creativity, originality, ingenuity, and craftsmanship.  He devotes a lot of time to talking about the layout and design of his ever-changing workshop, and there's a lot of clever ideas to steal and pass off as your own.   If you can't tell, I love Frank.  Oh, and his stopmotion videos are awesome. 

If you'd like to learn more about the differences between hardwood species, I can think of no better resource than R. Bruce Hoadley's 1980 masterpiece, Understanding Wood: A Craftsman's Guide to Wood Technology. Not only does Hoadley detail nearly every species used for woodworking, he does an exceptional job at describing how to prepare, work with and finish these hardwoods. This is an industry-standard resource, one that I'd highly recommend to every woodworker.
That's it. That's all you really need to begin woodworking. Over time you will add more tools to your collection, like chisels, drill bits, a sander and, more clamps; but for right now you should be able to get started on most beginner projects. Don't be afraid to look online for second- hand tools. Old drills and circular saws work well when given proper care. With some ingenuity you can figure out how to adapt most plans to the tools you have available. People have been making wooden items throughout human history, and they didn't need expensive planers, biscuit joiners or fancy jigs. Start learning the craft, see if you like it, and have fun.
As an x aerospace machinist I have run manual lathes and mills and programmed and run CNC as well. IMO a manual lathe is far more versatile and useful than a CNC for the average DIY buff. A CaN C is basically a very accurate production machine but to spend time programming, setting up, proving out just for a couple or several pieces is not practical ( unless you have money and time to spare)
I am working hard (or hardly working) on our master bathroom vanity! I spent the whole day in the garage on Monday, but it was such a mess from all the other projects I have been working on, so I spent the day cleaning and organizing instead of building. Now I have a place to build the vanity and this coming week there is nothing going on so I will also have time. I can almost smell the progress!
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