From: alexhormozi
Alex Hormozi shares his personal journey of extreme frugality and how it enabled him to save significantly, which he then leveraged to invest in skills and experiences that ultimately generated wealth and allowed for business growth [00:00:16]. His goal was never to brag about making 200 million annually [00:00:20].
The Strategy: Living Cheap to Go on the Offensive
Hormozi lived on $1,500 a month (or less) while earning significantly more [00:00:03]. This approach was driven by being incredibly risk-averse and wanting to build a financial reserve to go on the offensive later [00:00:13]. The core idea is that knowing how to live cheaply increases one’s risk tolerance, as there’s less to worry about [00:10:18]. The real cost of unaffordable luxuries is sacrificing your dreams [00:10:24].
Key Cost Centers for Frugal Living
Hormozi broke down his living expenses into three main categories: food, transportation, and living arrangements [00:00:55].
Food: “Mosey Meals” / Meal Hacks
Instead of cooking, which he disliked and found less financially sensible given the time commitment, Hormozi opted for “Mosey Meals” [00:01:08]. His strategy included:
- Chipotle: Eating twice a day, costing around 600 a month [00:01:17].
- Panda Express: Leveraging hacks for high protein, such as extra chicken [00:01:26].
- Chick-fil-A: Opting for 220-count chicken nuggets or two sandwiches for around 600-700 range [00:01:35].
- Time vs. Money: He calculated that the time saved by not grocery shopping and prepping food (which cost him $600 a month as a single guy) was better spent making money [00:01:10].
- Extreme Cheapness: For the absolute cheapest route, he suggests bread, peanut butter, and a multivitamin, with Lactaid milk as an optional third staple for protein, carbs, and fat [00:02:35].
Transportation: “Mosey Mobiles”
The most efficient way to own a vehicle, according to Hormozi, is to buy a used car (5-10 years old) in cash for around 100 a month after the initial capital expense [00:03:51].
Living: “Mosey Mansions”
Hormozi’s living situation evolved:
- Gym Floor: Initially, he slept on the floor of his gym, which technically cost him nothing in rent but was tied to his business’s $5,000 monthly rent [00:04:10].
- Free Accommodation: A gym member offered him a free place to sleep [00:04:25].
- Shared Bedroom: He then moved to a shared single bedroom in a seven-bedroom house, paying $400 a month [00:04:30]. This involved sleeping on a Craigslist mattress on the floor with a fan for white noise, amidst multiple couples and dogs [00:04:41].
The Importance of Location and Networking
Hormozi stresses the importance of moving to areas where “shit’s happening” and where people are actively pursuing their goals [00:05:14]. Even if it costs $200-400 more per month, being in an environment that encourages self-improvement is worth it [00:05:34].
- Connecting with Peers: Join online communities (Discord, Facebook groups) to find pockets of people with similar goals [00:05:38].
- The “Who” Factor: He attributes much of his rapid progress to “handshakes instead of hacks,” meaning connections with people [00:07:11]. Big deals in his life have always been one or two degrees removed from people he met [00:07:21].
- Raising Your Standard of Excellence: Being around successful people who discuss larger time and money increments (e.g., $100,000 investments, decades instead of weeks) naturally raises your ambition [00:06:47]. This serves as inspiration that success is possible because they are made of the same flesh and bone [00:06:41].
- Networking Etiquette:
- Accept the First Invite: Turning down the first invitation to connect shows disinterest and decreases the likelihood of a lasting friendship [00:07:29].
- Provide Value: Before meeting someone, do 30 minutes of research and try to bring something valuable to the table, even if it’s just applying your skill to them [00:07:47].
- Over-Deliver: If offering a favor, “blow them away” with the quality and speed of your work to make them feel awkward about the amount of value received [00:08:26]. This is investing in long-term relationships that pay dividends [00:09:00].
- Ultimate Leverage: The greatest leverage in a relationship is not needing anything back [00:09:11]. By providing value when you don’t need anything, you “stack IOUs” that can be cashed in when you do need to make your next move [00:09:16]. The time to dig a well is before you’re thirsty [00:09:30].
Financial Discipline and Mindset
Hormozi never focused on an income-to-spending ratio but rather on maximizing both sides: spending as little as possible and making as much money as possible [00:11:36].
- Competitive Spending: He recommends getting competitive with yourself about how little you can spend [00:11:09].
- Dave Ramsey’s Cash Envelope Method: Take out your monthly spending money in cash and stick to it [00:11:14]. Avoid “credit card hacks” and focus on true financial discipline [00:11:24].
- Daily Bank Account Checks: Make checking your bank account the first priority every morning [00:11:56]. This builds a “muscle” for understanding money flow, similar to how daily weigh-ins aid weight loss [00:12:11].
- Gamify Your Finances: Track your bank balance daily on a Google Sheet and aim for personal records [00:12:55]. This gamification makes managing money engaging and provides a sense of progress for the sacrifices made [00:13:06].
- Confront Your Reality: Avoid financial anxiety by confronting your current financial situation [00:14:10]. “Money sticks to the person who pays it the most attention” [00:14:18].
By living cheaply and saving, one can afford to spend on their education and increase their earning capacity, making them “hard to be stopped” [00:11:03]. This disciplined approach to personal and financial growth allows individuals to propel themselves faster [00:09:24].