I’ve written before on how to get out of debt using debt snowflaking even before PaidTwice came up with the great name and started the snowflake revolution. Since then I’ve gained a number of readers and thought it might be useful to discuss the concept of debt snowflaking again, especially as it’s something I’m really trying to get back to now. I’m refocusing on my debt snowball again after it sadly melted.
What is Debt Snowflaking?
Debt Snowflaking is an awesome tool that compliments your debt snowball. With a debt snowball, you set up fixed monthly payments to attack your debt and pay it off as quickly as you can. If you’re interested in setting up a debt snowball, I have a full primer in my get out of debt article. Debt snowflaking is the concept of supplementing your debt snowball by using any extra money and applying to your debt. Here are just a few examples:
- Receive an unexpected check in the mail? Deposit it and immediately make a payment against your debt.
- Save your change? Count it up, deposit it and make a payment on your debt.
- Sell stuff on eBay or Craigslist? Take the proceeds and apply it to your debt.
- I’ve been using my blog coaching and consulting revenue as snowflakes over the last month as well.
- I use MyPoints to earn relatively free money. When I redeem those points for gift cards, I transfer that money the money I would have normally spent from my account to my debt. For example, if I redeem my MyPoints for a $50.00 Amazon.com gift card, I also make a $50.00 payment against my debt.
The point is whenever you get “extra” money, immediately apply that money to you debt. I’ve had a few months in the past where these snowflake payments were in the area of $500! That’s a big snowflake. Mostly though, my snowflake payments are between $100 – $200.
Snowflakes make snowballs
What is a debt snowball? Just a bunch of debt snowflakes. Using this analogy, making lots of snowflake payments each month against your debt can quickly form another debt snowball. What better way to attack your debt than with multiple debt snowballs right? Remember, no amount of money is too small for a snowflake payment as many small amounts can add up to be large amounts.
If you made $50 a month in snowflake payments against your debt, that equates to an extra $600 per year, and depending on your interest rate (hopefully you have a zero percent interest rate) the result could be much larger. That’s making a pretty extra dent in your outstanding debt especially when coupled with your normal debt snowball.
Do you snowflake? If so, what extra money do you use. If you don’t snowflake, is this something you might start doing? Add a comment!
Photo by: à¥ Gapito à¥