26 y/o with 350k income and impulse spending needs help

[MDC86]

As the title states, I am 26 years old. I started in the workforce at 18. I have been making over $160,000 since I was 21 and after 3 promotions I am now at a $350,000 position that I've had for over a year. I like to think I am a very responsible person however I sometimes can't control my spending. I am frugal with some things but others I have no self control. I had a home built at 21 years old which is almost paid for but I think that for as much as I make I am not putting away enough.
My biggest issue is with vehicles. I have always had a passion for cars and every time I think I learn a lesson after purchasing an expensive one and selling it, I just keep going round and round. I know, the definition of insanity! I have gone through 9 BMW's, 2 Mercedes, 2 Maserati's, 1 Infiniti, and 1 Lexus. Almost all have been new and in most cases I've owned 2 at a time. Currently I have a new 60K+ Audi and a 160K+ Ferrari. While this sounds like bragging I am just trying to make a point that I have a interest in something and because I have the means for it to be funded, well its been spiraling out of control.
I'm here to try and learn how others control spending their hard earned money especially on things they really love. I know my car buying problem is hindering my ability to retire at a very young age. Cheers!

 

[AndrewJackson]

Party like a rock, party like a rock star...

 

[rodi]

Is your savings growing? Is it growing at a rate that you'll be able to continue this lifestyle when you retire? Or will you have to give up expensive hobbies, or keep on being a wage-slave.

If you don't mind my asking... what field are you in? Clearly one much more lucrative than being an enginerd.

 

[sunsnow]

First, congratulations on making such a high salary at a young age. I was in a similar position when I was your age. However, I always looked to the time when I would have the freedom to do whatever I wanted, to work or not as I chose. It's nice to be able to earn a lot, but even better is having a choice about what kind of work to do, where to live, and how many hours to work. Considering how much money it takes to have that freedom, I always felt a strong pressure to save. Maybe it would help you to think about how much money you would need so that you didn't have to work anymore. How much would you need to save every month? When you have that number in mind, suddenly you might not feel so flush. Without a goal like that, though, it's very easy to just spend all that excess money. Anyway, that's what helped me.

 

[arky]

Try to pick a percentage of your annual income (I would suggest 50%), have it deducted or otherwise saved before you "see" it in your checking account and then live it up with the rest !

 

[bondi688]

Keep advancing at your job and grow your income, that will partly solve the problem while you look for a cure.

 

[AndrewJackson]

Keep advancing at your job and grow your income, that will partly solve the problem while you look for a cure.

Disagree. Like another poster mentioned, you should just take a good % chunk out of your salary and just cash flow your spending. Without having a real lifestyle/mind change on your current spending path, that is what I would do.

 

[MDC86]

I read my original post and it does sound farfetched. So incase anyone needs a bit of credibility before they can give me some advice I attached an image.

rodi- Yes, my savings grows monthly. I put away anywhere between $5k-$15k a month between 401k, employee stock purchase program (I work for a fortune 500), an annuity type acct called a 15 pay life, and Vanguard MF's. I have a very low risk tolerance with my MF's so I choose tax exempt bond funds. As far as retirement, I am unsure if I will be able to maintain my lifestyle. I work as a director of finance for a fortune 500 based in Florida, but I work in the northeast region.

sunsnow- I truthfully wouldn't have the slightest idea about how much money I would need to save and for how long to say "ok, this is enough"

arky- That is decent idea, I'm sure Vanguard can deduct it from my checking account, but I think it would work better if it came directly out of my check like my 401k and espp though. I'll have to look into that.

bondi688- I'm at the top of the ladder. Their isn't anymore growth in income where I am at nor at a competitor.

 

[rodi]

Nice ride.
I've seen those through the window at the Ferrari dealership in la Jolla. The dealer must hate all the nose spots, and drool he has to clean up.

 

[bondi688]

Disagree. Like another poster mentioned, you should just take a good % chunk out of your salary and just cash flow your spending. Without having a real lifestyle/mind change on your current spending path, that is what I would do.

I should have just left the sarcasm tag in my comment.

 

[obgyn65]

Welcome to the forum.

 

[LakeTravis]

I read my original post and it does sound farfetched. So incase anyone needs a bit of credibility before they can give me some advice I attached an image.

rodi- Yes, my savings grows monthly. I put away anywhere between $5k-$15k a month between 401k, employee stock purchase program (I work for a fortune 500), an annuity type acct called a 15 pay life, and Vanguard MF's. I have a very low risk tolerance with my MF's so I choose tax exempt bond funds. As far as retirement, I am unsure if I will be able to maintain my lifestyle. I work as a director of finance for a fortune 500 based in Florida, but I work in the northeast region.

sunsnow- I truthfully wouldn't have the slightest idea about how much money I would need to save and for how long to say "ok, this is enough"

arky- That is decent idea, I'm sure Vanguard can deduct it from my checking account, but I think it would work better if it came directly out of my check like my 401k and espp though. I'll have to look into that.

bondi688- I'm at the top of the ladder. Their isn't anymore growth in income where I am at nor at a competitor.

Frankly, every single person I've ever known who had a career in finance also had personal finance issues. I don't know if it's because they pay so much attention to the finances of their employer that they are simply too tired to pay attention to their own or what......

I'm with the previous poster who said you should have a percentage of your income diverted before you can spend it. You'll really like seeing those MF's and other investments grow. Since you are at the top of your silo, you are probably tight with someone in HR/Payroll who is also at the top of their silo. If your company doesn't already have a program in place to have non-401(k) automatic deductions made, get them to start one by being the first top dog to sign up for it.

 

[bondi688]

MDC86
You should apply the same ability and drive that advanced your career to instill self discipline. The fact that you recognize that there is a problem is a good start. Do a budget, ask yourself again is this a right move before you go for your wallet. I think you can do it. But if your spending habit is so impulsive that it is pathological, then you may need to seek help.

 

[GrayHare]

"I can't complain but sometimes I still do"

Depends on what you want. If you want fun cars, spend it on them. If you want financial independence, "spend" it into savings. When you've amassed about 25x your annual expenses, you can kick back. At your pay rate, you can fund a decent independent lifestyle faster than most. If that's what you want.

 

[FIREd]

Hi MDC86, welcome.

Sounds like you know what to do. You just have to find the will to do it.

First you need to find out how much you need in order to retire. Since you are very young, you probably would need to save 33-50 times what you spend annually before you could consider retirement (closer to 33 if you take some risk with your investments, closer to 50 if you take little risk). That's only a ballpark estimate but that will give you an idea about whether you are on track or not. Next, you need to determine how much to save every month in order to meet that goal. That will tell you how much of your income you can afford to spend.

Bottom line: we can't tell you what to do. You have to make early retirement a priority and go for it.

 

[AndrewJackson]

ok, maybe I am just jealous, but I am calling bs on this story (even with the pictures). I mean who in their right mind would give a 25 year old a 350k job in corporate America? Am I the only one who is doubting this? Usually when something is to good to be true, it is. So where is the catch?

 

[jclarksnakes]

MDC86,
...Welcome to the forum. I am a car guy so I sort of (well not really) understand your problem. It seems to me that there are lots of much less expensive cars that can be interesting and fun and in fact make you seem like a serious car guy to other car guys rather than looking like a spoiled rich kid in a shiny new Ferrari. If you were to get a nice old Mustang or Camaro and spend a relatively small amount you could make it into a track car and actually race and be a "real" car guy rather than just another rich guy cruising around in a shiny 160K car. BTW, I drive a ten year old ZO6 Corvette. Initial cost and maintenance costs are small compared to your Ferrari. With your salary you can indulge your love for cars but you do not have to spend so much on them.
Good Luck
JC

 

[Major Tom]

Hi MDC86, welcome.

Sounds like you know what to do. You just have to find the will to do it.

First you need to find out how much you need in order to retire. Since you are very young, you probably would need to save 33-50 times what you spend annually before you could consider retirement (closer to 33 if you take some risk with your investments, closer to 50 if you take little risk). That's only a ballpark estimate but that will give you an idea about whether you are on track or not. Next, you need to determine how much to save every month in order to meet that goal. That will tell you how much of your income you can afford to spend.

Bottom line: we can't tell you what to do. You have to make early retirement a priority and go for it.

It's good to see a figure of 33 - 50 times annual expenditure (depending on risk) being mentioned instead of the flat figure of 25 that is often used. I'm a year shy of 50, began withdrawals about 18 months ago, and wouldn't have felt comfortable at a 4% WR.

 

[LakeTravis]

ok, maybe I am just jealous, but I am calling bs on this story (even with the pictures). I mean who in their right mind would give a 25 year old a 350k job in corporate America? Am I the only one who is doubting this? Usually when something is to good to be true, it is. So where is the catch?

I was thinking along the same lines. My brother is a VP of Finance or something at JPMorgan Chase and while he's paid very well he isn't anywhere near $350K. Took him a couple of decades to reach that level.

I've seen C-level finance positions in managed healthcare that pay very well, but they also top out around $200K.

So I'm very skeptical of a 25 yo at a Fortune anything being comped $350K a year.

 

[frayne]

I was thinking along the same lines. My brother is a VP of Finance or something at JPMorgan Chase and while he's paid very well he isn't anywhere near $350K. Took him a couple of decades to reach that level.

I've seen C-level finance positions in managed healthcare that pay very well, but they also top out around $200K.

So I'm very skeptical of a 25 yo at a Fortune anything being comped $350K a year.

Ditto, sounds like BS to me as well.

 

[donheff]

I have gone through 9 BMW's, 2 Mercedes, 2 Maserati's, 1 Infiniti, and 1 Lexus. Almost all have been new and in most cases I've owned 2 at a time.

Two new luxury cars a year, most similar if not the same type? This is the part that makes me think BS. But if it is true, it is pathological. Follow the above suggestions to divert 50% of your gross to savings but retain enough to seek out a good counselor.

 

[sheehs1]

I dont' know if this is BS or not so here goes.
MDC86, the car industry loves you as you are helping to make them rich.!!

Perhaps if you think of it in terms of "who you are making rich" it might help you realize you could help make yourself richer, faster if you curb some of your car buying. As you have already indicated, when you resell you are the one that looses. I'm assuming that was hard earned money you lost on the value of a trade in.

You are one of the most fortunate young people I know but you don't seem to realize it. Could be a little maturity is in order. At this rate, you will need somewhere north of 11 million to support your current life style. Even making $350K that can take a long time to save.

 

[Jay_Gatsby]

Ditto, sounds like BS to me as well.

Might be BS, but I've seen salespeople at my company earning that kind of money or better in their late-20s. Some of the sales VPs in their mid-30s are earning close to 7-figures.

 

[eytonxav]

Unless you have a CEO as a father with unilateral powers, I find this very hard to believe. Further more, if anyone has the brains, drive, skills, and experience to talk themselves into a finance position at a Fortune 500 company at such an age and to remain in that position for any length of time, they certainly do not need to be asking this forum for advice.

Also, such a salary is not commensurate with a Director's title in the world of mega-corps.

 

[Lazarus]

That kind of salary would not go to a 20 something at my former company.
Maybe at some it would. It seems pretty doubtful to me.