Living in a Closet & Driving a Civic with $1M Cash in the Bank

I very vividly remember the day that I had a million dollars in cash in my bank account. And what's interesting is my lifestyle and how I was living was really no different than several years prior to that, when my net worth was probably negative and I was struggling to make payroll. So I'm going to walk you through kind of that story and just kind of give my 2 cents on how investing back into your business and. And living frugally, in my opinion, leads to the best outcome when you're building wealth. So the first four years of doing Augusta Lawn Care, I made approximately.

$11,000. I went through all my profit and loss statements and everything like that, and this is how much money I took out to live on. Now, that's not the profit of the business, because there was no profit, but this is how much money I had to take out of the business to live because I was living extremely frugally. And when all you do is work every day, there's not a lot of time to spend money. So that's a good thing when you are broke. And so the first four years, that's essentially what I took out of the business. Now the next year, in the fifth year, is when we switched from paying our team hourly to pay for performance. And most of you know that story. PPPSoorcome.com has the full video on there. So in year five.

I was able to take out of the business $280,000 in distributions. That's after I paid myself as a salary and everything else was paid after making that switch to P4P. So started becoming profitable. And in my opinion, this is where most business owners stop. And what they do at this point is they increase their standard of living. And that's fine. I'm making this video for the person that wants to go past being $280,000 a year and wants to make 5, 10, 15 million. And so at this stage, when you're able to pull a decent living out of your business, and I was going to the business just a couple times a week for meetings, it's very tempting to increase your standard of living. In fact, what I did instead, when I was making the 280,000, the very next year, we decided we were going to franchise the business. So instead of increasing my standard of living, I actually decreased my standard of living and I moved into a closet.

So what ended up happening is next door to the gym, which I own, Anytime Fitness, next door there used to be a Curves. Now Curves is a women's gym. And it's very Small. I want to say it's about the whole build. Like the whole facility is about 1500 square feet. And that's where we currently now train all of our new owners at Augusta Nation. But inside of that unit there was a closet. And so I negotiated with my landlord is, hey, I own the gym. This is the gym here. Boom. There is this little space next door called what used to be Curves. Curves failed. It's not quite this big. But I would like to add that to my lease, and I want it for free, because there's a lot of vacancy in the strip mall. I want it for free. I will pay what's called triple net only, which is essentially all of the kind of general maintenance, the common areas, etc. So I ended up paying for this bad boy. It's $400 per month, okay? And if I would have paid actual rent, it would have been like $2,500 a month. But don't get me wrong, I pay like $7,000 per month or even more for the gym. So I was like, hey, as part of my lease when I bought the gym, I want to tack this bad boy on. Now, inside of here is where we set up the studio where most of the time you see my videos being made, and we also have all where the owners get trained. But inside of this little thing is a closet. And this closet is exactly 6ft by 6ft. And that's where I lived for the first three years after making $280,000 per year in take home distributions. So I took that money and that's what we used to start the franchise. It costs a lot of money from a legal standpoint to. To get everything set up correctly and investing a lot into Command center, which up until last year just sucked hundreds of thousands of dollars. And it was all possible because actually this everyone will point to in five or ten years how we structured the franchise and how we made it for the owners and things like that. I will point to the fact that the reason we didn't have to take venture capital and private equity that would force us to charge royalties and do all this other stuff. The reason we were able to do all of that is because I lived on nothing. And so we were able to use this space for the studio for training the franchisees. And I lived here for three years. Now, let's be very clear. This was not a great living situation. Okay? Right here is a public road. People can drive up to this door and they would knock on it quite often. There is a Highway I5. It goes right here, there's train tracks. Less than, I would say, 60 to 70 yards from where I would sleep at night, there is train tracks. And it would shake the entire building. Right here is the weightlifting area where the people would do deadlifts in the gym. And it would shake this entire wall. And I could absolutely hear it. And if you've ever been at the studio for training, you know when someone drops a heavy deadlift, you can hear it. It like shakes the entire area here. And that's what I lived at for three years. And it was difficult, like every single night being woke up by the train, it would cross six times every single night and it would honk crazy loud. It's kind of not an urban area. There's not a lot of residential because it's all commercial. This is part of a mall, by the way. There's like 30 other tenants. There's a grocery store, there's a whole bunch of outlet malls, restaurants, etc. So people are walking by like my front door all the time and, you know, banging of the weights. And it's not like a great place to live. When I say 6ft by 6ft, I'm not joking. It was just enough for a single mattress to sit in there. And the reason I know it's six feet is because I'm five foot and a half and if I stretched out my toes, I would be able to easily touch both sides of the walls, like, so it's 6ft by 6ft. That's where I slept on the floor on a mattress. But. But because of this, we were able to sustain massive losses at the franchise for the first few years. And now since then, I have upgraded to a one bedroom apartment complex. I own the complex and there's a one bedroom apartment and I live there. And then this is my tiny house. So between those two places is where I live. And the whole goal is to keep costs super low and we'll put money back into the business. Now I remember two very distinct days, numero uno. The day when I looked at my bank account and it said $1 million in cash. Say, that's a lot of money. Well, when you're burning through well over a million dollars a year in expenses, a million dollars in cash is not a lot. And when you're growing really quickly, it's also not a ton of money. And I also remember, though, it's still very cool to see like that many zeros inside of your bank account. And I remember seeing that, like, oh, like I remember the exact time when that was like in my stock portfolio, I remember the time when that was in like my bank account and like, I'm like, that's a lot of money. Like that's a lot of money. And then I look at how much expenses are coming in, I'm like, oh, it's not that much money. However, I also remember the day and that was when I would be coming home from church Sunday night or on a Wednesday evening and realizing that I was not going to sleep because I had to do invoicing, billing and finish the end of the month, all the invoicing stuff at the time. I would like punch in person's credit card every single month. So I had to go through every invoice and do that manually. And it would take me the whole evening, get everyone's schedule set up. And I remember thinking like, I am not going to sleep tonight and I am going to.

I am going to wake up at five o' clock in the morning.

And when I mean wake up, I mean no sleeping, just waking up and starting my day by going out and mowing grass. And I also knew that I would be having allergies that entire day and I'd have to go through two or three shirts and I have to use one as I used got sweat, sweat through them. I would use the next one as a snot rag because I was allergic to the grass and I'd break out in hives all over and the sweat would not work well with that and it would be hard to breathe. I, I knew all that was coming. And what stinks is those first four years I had absolutely nothing to show for it. And in my opinion, when you start to have some semblance of success, the ability to keep your living costs low allow you the flexibility to continue growth. A reason a lot of times people in my opinion will top out at 150, 200,000, $250,000 in take home pay is because they allow their standard of living to simply increase alongside their increase in revenue. And as Alex Hormozi says, wealth is an equation, which means it's not about how much your net worth is. It's not really a big deal. I was actually fairly wealthy when I was living inside the closet. I was fairly wealthy when I was still living at home and running the business and making the $11,000. My whole point today is the fact that wealth is an equation and it is simply the amount of money that you make.

Versus the amount of money that you spend. And as long as you make more money than you spend, your net worth is going to go up. And so instead of trying to get wrapped so much into like, how much money am I taking home from the business and what's my take home pay? What's my net profit? I am simply trying to focus on one thing. Am I growing the business and. And am I making more than I'm spending? That's very simple. Yes, it is. Because if you do this, you will never go out of business. And I have found that the fear of failure, that is the fear of making $0 and having $0 in your bank account. The fear of having $0 is a whole lot less scary when you choose to live very close to $0 all of the time. What I mean by that is by keeping your standard of living so low that like. So, for example, up until about a year ago, my monthly cost was $2,700. I knew if I could just make $2,700.

It went up when I moved into my one bedroom apartment complex and got this. But up until then, I knew If I made $2,700 per month, I could live just fine. This is not too far away from zero. So the worst case scenario is I went from 2,700 to zero. Not a big drop. However, if I had a really, really high standard of living and I needed $25,000 per month in order to pay off a mortgage, have a second house, have a fancy boat, do a bunch of other things, and my personal expenses were $25,000, it would be very scary to put, invest in the business, grow, expand, and take risks. And because the drop from where I'm at now to failure is extremely high. And so I would personally rather, if I'm trying to grow the business and maximize for growth, I would simply try to keep your personal expenses as low as possible to the fear of failure and going to zero. Not that bad. $2,700, that's like a couple projects I can get in a couple days if I really had to. And so remember, wealth is an equation. Keep your standard of living as low as possible. As you make more money, try not to increase that standard of living. If you're trying to grow the business, if you're trying to maximize for other things in life, like enjoying life and relationships and family and things like that, you're gonna need to increase your standard of living. You deserved it. Let's go. I have absolutely no, cast, no judgment on you whatsoever. But if you're trying to maximize for growth, and this is where I'm saying this for a lot of youngsters out there. I'm gonna say youngsters 50 and below. I'd say youngsters to business that are trying to grow and you're like, I want to grow, I want to grow. Okay, well then keep this number down and keep this as low as possible to be able to keep that money in the business. And I promise you, sacrifice or regret you choose sacrifice your standard of living today or regret the fact that in 10 years you only have would'ves and could'ves because you didn't invest back into the business and instead you sucked it all out with your high standard of living. Alright, Mike Andes checking out.