Why You Should Live On $1500 a Month Ep 472

Summary Notes


Alex Hormozi shares his financial strategies and experiences on living frugally to amass wealth and invest in business growth. He emphasizes confronting financial anxieties, living below one's means, and the importance of attention to money management. Hormozi breaks down the three main living costs: food, transportation, and housing, detailing his own cost-saving measures like eating out affordably and choosing modest living arrangements. He advocates for tracking expenses, avoiding unnecessary debt, and viewing money management as a game to increase financial discipline. Hormozi also stresses the value of networking, seizing opportunities, and providing immense value to others as a long-term investment in one's entrepreneurial journey.

Summary Notes

Confronting Financial Anxiety

  • Alex Mosi emphasizes the importance of confronting financial anxieties directly.
  • He believes that focusing on one's financial situation can lead to better management and growth of wealth.
  • Wealthy individuals see business as a game and pay close attention to their finances.

"You got to confront it. You're like, I'm fucking poor. I don't want to be poor. And so I'm going to look at this money until eventually it starts paying attention back to me. Because money sticks to the person who pays it the most attention."

The quote highlights the need for acknowledging one's financial state and dedicating attention to improve it. It suggests that money grows with attention and management.

Building Wealth Through Frugality

  • Alex Mosi shares his experience of living frugally despite earning a significant income.
  • He lived on $500 a month to save and invest for future opportunities.
  • Mosi's approach was not about immediate lifestyle gratification but long-term financial goals.

"When I was a wee lad, a young man, I lived on one $500 a month. And believe it or not, during that period of time, while splitting a room, sleeping on the floor with another dude, I was taking home about 15, $20,000 a month."

The quote describes Mosi's personal experience of living below his means to save for future investments, demonstrating his risk-averse nature and focus on long-term financial success.

The Three Big Costs of Living

  • Alex Mosi breaks down the three main expenses: food, transportation, and housing.
  • He advocates for cost-effective living to save money for business investment and growth.
  • Mosi's strategy includes living cheaply to allocate funds towards offensive financial moves.

"And so there are three big costs to living, okay? And so what I want to do is I'm going to break down how I was able to live for so cheap."

This quote introduces the three significant living costs that Mosi will discuss, setting the stage for his strategies on minimizing these expenses.

Mosey Meals: Economizing Food Costs

  • Alex Mosi optimized food costs by eating out strategically at chain restaurants.
  • He chose meals that were time-efficient, allowing him to focus on earning money.
  • Mosi emphasizes the balance between cost, convenience, and nutritional value.

"Food wise, some of you guys have seen mosey meals, meal hacks, the things that I do at these chain restaurants. And I did it that way because I don't like cooking, and I wanted to have more time to make money."

The quote explains Mosi's rationale for his food choices, prioritizing time for income-generating activities over cooking, while still managing to keep food costs low.

Extreme Budgeting for Food

  • Mosi provides alternatives for even cheaper living, like subsisting on bread, peanut butter, and multivitamins.
  • He suggests this extreme budgeting for those who want to minimize food expenses to the lowest possible level.
  • The goal is to save aggressively for business opportunities or skill development.

"If you want to be extreme on it, you can be extreme, alright? And you could probably knock that down to $100 a month."

This quote provides an example of how one can live on an extremely tight food budget if necessary, highlighting the possibility of reducing food costs to focus on financial goals.

Mosey Mobiles: Transportation Strategy

  • Mosi advises buying a used vehicle in cash to avoid car payments.
  • He recommends cars that are 5-10 years old as the most cost-efficient choice.
  • This approach is part of his broader strategy to minimize recurring expenses.

"The most efficient way to own a vehicle is to purchase it in cash, a used vehicle that is ideally between five and ten years old."

The quote offers practical advice on vehicle ownership, emphasizing the importance of avoiding debt and choosing a car that provides value for money.

Vehicle Expenses and Insurance

  • Alex Mosi emphasizes the benefit of owning a cheaper car to reduce insurance costs.
  • Recommends purchasing a car with cash to avoid loan payments.
  • Suggests that a lower-cost vehicle and associated insurance can be part of a budget-friendly lifestyle.

"The cheaper your car, less the insurance, all right? Because they don't have to shirt too much."

This quote highlights the correlation between the value of a car and the cost of insuring it, implying that cheaper cars attract lower insurance premiums.

Housing and Living Arrangements

  • Alex Mosi shares his personal experience with unconventional living arrangements to cut costs.
  • He lived in a gym and then in a crowded house, sharing a single bedroom to save on rent.
  • Describes the challenges of living in a house with multiple couples and pets.
  • Emphasizes the importance of minimizing living expenses, even in high-cost areas.

"I then really splurged. And at, I think month four or five or six or whatever it was, I ended up having a member at my gym say, are you really sleeping here? I said, I sure am."

This quote illustrates Alex's initial living situation, sleeping in his gym to avoid rent expenses, and how this evolved into finding a more private yet still affordable arrangement.

Budgeting and Expense Management

  • Alex Mosi advocates for a competitive approach to spending as little as possible.
  • Mentions Dave Ramsey's strategy of taking out a month's worth of cash to control spending.
  • Stresses the importance of avoiding car payments by buying vehicles in cash.

"If you can get competitive with yourself at how little you can spend, recommend heavily."

This quote suggests adopting a mindset of making a game out of frugality, which can help in reducing overall expenses.

Location and Cost of Living

  • Discusses the trade-off between living in a cheaper area versus a more dynamic location.
  • Asserts that paying more to be in an area with better opportunities can be worth the extra cost.
  • Recommends prioritizing locations where one can be surrounded by ambitious individuals and opportunities.

"It is worth the $200 to $400 a month hardcore."

This quote underlines the value Alex Mosi places on living in an area that offers more opportunities, even if it means higher living costs.

Income Generation and Side Hustles

  • Encourages those earning under $60,000-$70,000 a year to consider driving for Uber with a qualifying vehicle.
  • Highlights the flexibility and immediate earning potential of gig economy jobs.
  • Shares his own backup plan of working multiple jobs to ensure financial stability.

"If you are making less than 60 to 70,000 a year, I don't understand why you wouldn't take that car that you saved up for that's got four doors... and drive Uber."

This quote illustrates Alex's view on using assets like a car to generate extra income, particularly for those not already earning high salaries.

Risk Tolerance and Lifestyle Choices

  • Explains how living frugally increases one's risk tolerance because of lower financial obligations.
  • Argues that excessive spending on non-essentials can hinder the pursuit of one's dreams.
  • Advocates for a minimalist lifestyle to maximize financial resources for future investments.

"It's very hard to fight someone who has nothing to lose, and it's very hard to fight someone who can live on nothing because everything you have goes, boom, straight into your net worth so that you can go on the offensive later."

This quote emphasizes the strategic advantage of having low living costs, which allows for greater risk-taking and investment in one's future.

Financial Discipline and Budgeting

  • Emphasizes the importance of living within one's means and investing in education to increase earning capacity.
  • Discusses two approaches to financial management: Dave Ramsey's method of strict budgeting and the competitive bank account method.
  • Advocates for checking one's bank account daily to develop an understanding of money flow and to cut unnecessary expenses.
  • Highlights that awareness of finances can lead to improvement, similar to weight loss by daily weighing.
  • Stresses the importance of prioritizing financial management by making it the first activity of the day.

If you spend $5,000 a month, $3,000 a month, $2,000 a month on your education so that you can increase your earning capacity, it's hard to be stopped.

This quote underlines the value of investing in one's education as a means to enhance earning potential, suggesting that it is a worthwhile expenditure.

One of the habits that I highly encourage you do is that every morning, what's the first thing you check? Is it Instagram? Is it YouTube? Is it your texts? I will tell you the first thing that I checked the mornings when I was in this period of my life, it was my bank account.

Alex Mosi is emphasizing the habit of checking one's bank account every morning as a way to prioritize financial health over other daily distractions like social media.

Drawing and putting awareness to the problem or the thing that you're trying to change improves it.

The quote captures the essence of improvement through increased awareness and attention, which is applicable to financial habits.

You got to check it. You got to look at it every day.

This quote stresses the necessity of daily engagement with one's finances to gain control and make improvements.

The Psychology of Money Management

  • Explains the psychological benefits of tracking finances, including the encouragement of positive behavior through immediate rewards.
  • Suggests that regular monitoring of bank accounts can lead to discovering unnoticed expenses and improving saving habits.
  • Discusses the concept that money flows towards those who pay the most attention to it, relating it to the economic principle of capital accumulation.
  • Criticizes credit card reward hacking as a distraction from the larger picture of overall spending.
  • Recommends using debit cards over credit cards to avoid the temptation of rewards and maintain financial discipline.

Money sticks to the person who pays it the most attention, because I promise you, this is how the economy works.

This quote implies that attentive money management is rewarded with financial growth, as seen in the behavior of successful individuals and the broader economy.

If you are one of these people who wants to credit card hack, right? Who wants to, like, I get 2% here and I get 1% here and I get 3% here. You're focusing on the wrong fucking percentage side, all right?

Alex Mosi criticizes the practice of credit card reward hacking, arguing that it diverts attention from the more significant aspect of managing overall spending.

Gamification of Saving and Tracking

  • Encourages turning financial management into a game to make it more engaging and to set personal records in savings.
  • Recommends using tools like Google Sheets to track daily bank account balances and observe long-term trends.
  • Shares personal satisfaction derived from seeing financial progress over time, reinforcing the value of disciplined saving and tracking.

If you really want to be a g about it, this is how I did it. You check your bank account, and you have a google sheet on your phone, all right?

Alex Mosi shares a personal strategy for tracking finances, suggesting the use of a simple tool like Google Sheets to monitor daily balances and trends.

And every month, you get a little bit bigger, a little bit bigger, a little bit bigger. And you start feeling progress for the sacrifices that you make every day, because you look at where you're at this month versus last month, and you see progress.

This quote conveys the motivational aspect of witnessing one's financial growth over time, which is a result of consistent tracking and disciplined saving.

Income to Spending Ratio

  • Alex Mosi admits to not having a set income to spending ratio but implies the significance of tracking and managing finances effectively.
  • The absence of a strict ratio suggests a flexible approach to financial management, tailored to individual circumstances and goals.

So I get asked a lot about the income to spending ratio, and I, believe it or not, never had one.

The quote reveals that despite not adhering to a specific income to spending ratio, Alex Mosi places importance on the broader concept of financial awareness and management.

Maximizing Income and Minimizing Expenses

  • Alex Mosi emphasizes the importance of minimizing expenses to the essentials and maximizing income as a strategy for financial growth.
  • Rather than allocating a fixed percentage of income for savings, Alex saved every dollar that wasn't spent on necessities like food, transportation, and living expenses.
  • This approach is presented as a 'game' of optimizing both sides of personal finance.

"And that might sound crazy. And some people like the percentage. If that works for you, awesome. But for me, it was, how can I hack the game to spend as little as humanly possible, period. And then how can I hack the other side of the game, make as much money as I possibly can?"

The quote explains Alex's personal strategy of extreme savings and aggressive income growth, rejecting the common advice of saving a fixed percentage of income.

Importance of Networking and Community

  • Alex Mosi advocates for the power of networking and joining online communities to align with people who share similar goals.
  • He highlights the significance of being around the right people to open doors and create opportunities.
  • Alex details his own career moves, which were strategically made to be around specific individuals who could mentor and introduce him to others in the industry.

"So I think the easiest thing to do is to connect with people online, join communities, join discord groups, join Facebook groups, whatever it is, and then try and figure out where there are pockets of them, because people congregate."

This quote emphasizes the value of connecting with like-minded individuals online and finding communities where people with similar ambitions gather.

Geographical Relocation for Opportunity

  • Alex describes his own experiences of moving to different locations, such as Baltimore, California, Puerto Rico, Irvine, and Albuquerque, to be around people who could help him grow professionally.
  • He discusses the concept of 'pockets' where people congregate in certain areas, and the value of being in these epicenters to raise one's standard of excellence.
  • Alex warns against turning inspiration into envy, instead suggesting to use others' success as motivation for personal growth.

"And with each of these moves was a target person that I wanted to get around. And I wasn't being a creep about it, but I knew."

This quote describes how Alex's geographical moves were strategically aimed at being in proximity to individuals who could positively influence his career trajectory.

Wealth Indicators and Timeframes

  • Alex discusses how the way people talk about resources, such as time and money, can indicate their wealth and mindset.
  • He notes that wealthy individuals often discuss larger sums of money and think in longer time increments, suggesting a shift in perspective for aspiring entrepreneurs.

"You can judge how wealthy people will be by how they talk about how they allocate resources, time, and money, and the increments that they measure those in."

The quote implies that a person's approach to discussing and managing resources can be a predictor of their financial success.

Networking Strategies

  • Alex emphasizes the importance of accepting the first invitation to network, as it sets the stage for a potential lasting relationship.
  • He advises doing preparatory research before meetings and bringing something valuable to the conversation to establish a strong connection.

"The number one rule that I have with networking is don't turn down the first invite."

The quote highlights a networking strategy that Alex believes is effective in building and maintaining professional relationships.

Providing Value in Relationships

  • Alex Mosi shares a life hack for helping others by providing overwhelming value without expecting anything in return.
  • He uses the analogy of a 'free patio' to illustrate that doing favors should be done to a high standard to make a lasting impression.
  • Alex suggests that this approach to providing value can lead to accumulating IOUs and creating leverage in relationships for future endeavors.

"The ultimate leverage that you can have in a relationship is not needing anything back."

This quote encapsulates Alex's philosophy that the most powerful position in a relationship is being able to provide value without immediate expectation of reciprocation, which can lead to greater benefits in the long run.

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