Friday, January 1, 2016

Why Am I So Excited About Two Jars of Pennies?

As you are probably aware, college is not cheap, even when you go to a fairly inexpensive school I like I did.  Like so many other students, I need to take out loans in order to complete my education.  This included both my undergraduate and both of my graduate degrees.  Yes, I am a perpetual student and I love being in school.  However, I do not like the reality of student loan debt and student loan payments.

Each month, my wife and I pay almost $350 to student loans.  $350!  That's crazy!  So this year, we've decided we are going to pay off the loans (or make a fairly sizable dent).  Currently, we have a little less than $28,000 in student loan debt.  Just typing that out makes me sweat a little bit.


Now, why am I so excited about the two jars of pennies?  Well, we decided to make a visual representation of the amount of money we owe and the amount of money we've paid off on the principal.  That is where the two jars come in.

The first jar (the one with all of the pennies) stands for the amount of money we owe presently.  As I said, we owe almost $28,000, so this jar contains 280 pennies.  Each penny is worth $100.  Every time we pay $100 toward the principal, we move a penny from the first jar to second jar.  This includes our monthly loan payment.  I looked at how much goes toward the principal and how much goes to interest each month.  After the payment posts to the account, I'm going to make a payment for the difference between the amount that went to the principal and $100.  In each situation, it will be around $20-$25.  It looks like we are going to have to skip a meal out in order to cover that difference, but that's better for us, right?

If you look closely in this jar, you can see that we've already been able to move 4 pennies to the "Paid" jar.  We decided not to make a purchase and instead to put that money toward the debt.  Additionally, we "found" $300 in our bank account that we could safely afford to put toward the debt.  It felt really good to be able to move those pennies, even if it was just a small drop in the bucket, or jar, as it were.  Hopefully this is the start of some great momentum and we can start moving pennies like crazy.  I would love to be able to show the two jars at this time next year with all of the pennies moved.  How awesome would that be?

What financial goals do you have for the coming year?  Please share in the comments below.