From: alexhormozi
To achieve significant financial goals and invest in personal growth, it is crucial to understand how to live cheaply [03:07:07]. This approach allows individuals to save money for business ventures or to invest in skills and experiences that will generate income [03:09:02]. The speaker, who managed to live on 15,000-$20,000, attributes this to being risk-averse and wanting capital for future offensive moves [00:00:00].
Three major cost centers to address are transportation, living, and food [00:54:56]. This article focuses on strategies for transportation and accommodation.
Transportation: Mosey Mobiles
The most efficient way to own a vehicle is to purchase a used car in cash [03:25:00]. It is recommended to buy a used four-door vehicle that is ideally between 5 and 10 years old, which can often be found for around $10,000 [03:27:00]. This eliminates car payments, leaving only car insurance, which is less expensive for cheaper vehicles [03:40:00].
Leveraging Your Vehicle
Possessing a four-door vehicle (15 years or younger, no visible damage) enables flexible income generation through services like Uber [09:47:00]. This offers immediate earning potential with minimal risk beyond the vehicle itself, allowing individuals to work flexible hours and even combine apps [09:56:00]. This strategy contributes to the ability to live cheaply and maintain a higher risk tolerance for entrepreneurial endeavors [10:18:00].
Accommodation: Mosey Mansions
Finding low-cost accommodation is critical for reducing monthly expenses. The speaker lived in Southern California, one of the most expensive markets, demonstrating extreme measures to save [04:02:00].
Strategies for Cheap Living
- Sleeping at a business/gym: Initially, the speaker slept on the floor of their gym, which technically cost 5,000/month business rent [04:10:00].
- Free accommodation: Leveraging connections to find temporary free places to stay [04:23:00].
- Splitting a room: The speaker paid $400 a month to split a single bedroom in a seven-bedroom house, sharing the room with another person, and sleeping on a Craigslist mattress on the floor [04:30:00]. This environment was challenging, with multiple couples and dogs, but provided a low-cost option [04:48:00].
Strategic Location and Networking
While living in cheaper areas like North Carolina or Boise, Idaho, might allow for a $400 room without splitting [05:05:00], it is recommended to consider living in areas where significant opportunities and growth are occurring, even if it means a higher cost or more restrictive living conditions [05:14:00].
- Being around people: Being in environments with driven individuals can inspire and accelerate personal growth [05:53:00].
- Online communities: Connect with like-minded individuals through Discord, Facebook groups, or other online communities to find pockets of people with similar goals [05:38:00].
- Networking: The speaker moved strategically to be around people they wanted to learn from, emphasizing that handshakes and connections open more doors than “hacks” [05:53:00]. Always accept a first invite to dinner or a meeting, and prepare by researching the person and bringing something valuable to the table [07:29:00].
- Providing value: Offer significant value to others without expecting immediate returns. This builds “IOUs” that can be cashed in when making future moves [09:11:00].
“The time to dig the well is not when you’re thirsty but when you have enough water so that when you are thirsty it’s there” [09:30:00].
Financial Discipline and Mindset
Reducing expenses increases risk tolerance [10:20:00]. Avoiding unnecessary spending, like expensive cars or club outings, frees up capital that can be used for education or investments to increase earning capacity [10:29:00].
Gamifying Finances
- Competitive spending: Become competitive with yourself about how little you can spend [11:09:00].
- Cash envelope method: Use a physical wallet for your monthly spending money, and do not exceed that amount [11:14:00]. This emphasizes financial discipline over credit card rewards [11:27:00].
- Daily bank account checks: Make checking your bank account the first thing you do every morning [11:57:00]. This builds awareness of money flow and can encourage positive financial behavior, similar to daily weighing for weight loss [12:11:00].
- Tracking balances: Maintain a Google Sheet to record your daily bank balance. This allows you to track personal records and long-term trends, providing positive reinforcement for sacrifices made [12:55:00]. Over 90 days, this habit can significantly improve your financial situation [14:02:00].
“Money sticks to the person who pays it the most attention” [14:19:00].