Follow the Debt Snowflake Method

If you’re buried under debt, the debt snowflake method might be just the trick for clawing your way out. With the debt snowflake method, you use every little bit of extra cash to pay down debt. The key is to find money on a daily basis that you can contribute to your debts and then make multiple payments in a month.


Assessing Your Debt Situation

  1. Identify your debts. Sit down with your monthly statements and create a spreadsheet of all of your debts.[1] Note the name of the creditor and the amount of your minimum monthly payments. Identify if you have any of the following:
    • credit card debt
    • automobile loan
    • home mortgage
    • personal loans
  2. Check that you can afford the minimum payments. With the debt snowflake method, you will use extra cash every month to pay down your debts. However, you need to make sure you can make your minimum payment using your paycheck.
    • You may have to create a budget by identifying your fixed monthly expenses (such as rent and debt payments) and your discretionary spending (such as food and entertainment). Reduce discretionary spending until your income exceeds your expenses.
  3. Decide if the snowflake method is right for you. With this method, you budget to pay off the minimum on your debts, but you don’t budget to pay extra. Instead, you look for ways every day to save money and contribute that money to your debt. The snowflake method works best if your budget is tight. However, you need to be disciplined at finding money or else you’ll not pay down your debt.
  4. Decide if another debt repayment method is better. There are two other popular repayment methods: debt avalanche and debt snowball. Compare them to the debt snowflake method to see which is right for you:[2]
    • Debt snowball. You budget how much you will spend on debt repayment. You pay the minimum on all debts but then contribute extra to the smallest debt. Once you pay that off, you contribute extra payments to the next largest debt. The debt snowball method gives you psychological momentum as you see debts disappear.
    • Debt avalanche. You budget how much to spend on your debts for the month and pay the minimum. You then contribute extra to the debt with the highest interest rate. Once that is paid off, you pay the debt with the next highest interest rate. The debt avalanche method is the fastest method for paying down debt.

Saving Extra Money

  1. Find ways to save every day. The key to the snowflake method is to constantly look for ways to save a few bucks. Trim your discretionary spending by finding cheaper substitutes or forgoing the purchase altogether. If you can save $3 a day, you’ll have almost an extra $100 to contribute to debt each month.
    • For example, you can brew your own coffee and take it to work in a thermos, which is an easy way to save several dollars a day.[3]
    • Instead of buying lunch, fix a sandwich at home and take it to work.
    • Every little bit saved is a “win” that you should celebrate. Give yourself a fist pump—and then remember to pay your debts.
  2. Collect your coins in a jar. At the end of the day, you should empty your pockets or purse of all change. Put the money in a jar or piggy bank and save the money.[2] You can eventually deposit your change in your bank account and make a payment.
    • To really save money, put all of your bills in the jar as well. For example, you might break a $20 to buy a sandwich for lunch and then a frozen entrée for dinner. Put whatever money is left at the end of the day in your jar.
  3. Hold a yard sale.[2] A great way to get some extra cash is to sell all of your unused possessions. Hold a yard or garage sale and paper your neighborhood with flyers. Contribute the proceeds to your debt.
    • If you don’t have a lot of stuff to sell, then you can sell items on eBay or Craigslist.
  4. Contribute unexpected money to debt. You might find a $5 bill in your book bag or get $20 in a birthday card. Alternately, you might get an unexpected tax rebate. Don’t spend this money. Instead, pay down your debt.[2]
  5. Go on a diet. Need to lose a few extra pounds? Cut back on your eating and help pay off your debt at the same time. Of course, fruit and vegetables generally cost more than cheeseburgers and chips. However, you can save money by buying whole foods, such as block cheese instead of shredded cheese. You’ll also save money by buying less food overall.[4]
    • Eat less when you go out as well. Instead of ordering appetizers and dessert, simply order a main course and contribute your savings to your debt.
    • Don’t forget to cut out alcohol, which is both expensive and full of empty calories. Instead of buying a beer with colleagues on Friday, sip iced water with lemon.
  6. Use coupons. Find coupons online or in your local community paper. Some stores offer double coupons, which will double your savings. Take the coupons with you when you shop for groceries and use your savings to pay down debt.[1]
  7. Pursue a passion. Identify something you love to do but don’t currently get paid for. Chances are, you can turn that passion into a money-making opportunity. Consider the following methods for earning extra cash:
    • If you love photography, then start a side hustle taking wedding photographs. You can advertise by word of mouth or create a simple website that showcases your portfolio.
    • If you love to write, then write articles or blog. You can find writing jobs at the Upwork website.[5]
    • If sports are your passion, then offer lessons to people in the community. Advertise online and with a flyer at your local community center.
  8. Do gigs. Gigs are one-off jobs that you do for cash. For example, you might watch someone’s child for the evening or mow a neighbor’s lawn. Contribute your extra money to your debt.
    • An easy way to find gigs is to ask around. Plenty of people need help around their houses. Give people your name and remember to smile.
    • You can also look for gigs online. If you’re willing to dog sit, check websites like DogVacay and Rover.[6]
    • You can find jobs as errand runner on sites like TaskRabbit.
  9. Learn new skills. Chances are you pay someone almost every day to do something you could do yourself. Learn new skills to save money. Consider the following:
    • Learn to cut your own hair. Buy some hair clippers or an electric razor. Now is the time to try a simple hairstyle, which will save you money.
    • Don’t pay someone to change the oil in your vehicle—do it yourself! You’ll save about $30.
  10. Rent out a room. You might be able to rent a room by using a website such as Airbnb. If you have an apartment, check your lease to see whether or not you can sublease space in the unit. If you live an homeowners association, check your HA’s rules to see if it is allowed.[4]
  11. Identify what not to do. Saving money every day might be hard. However, there are certain shortcuts you absolutely should not take. Don’t do any of the following:
    • Avoid raiding your retirement fund to pay off debt. You’ll need that money when you retire.[1]
    • Don’t take on any other debt. In particular, you should avoid payday loans or cash advances from a credit card.

Paying Your Debts

  1. Decide which debt to tackle first. Let’s say you have three credit card debts. You need to decide which one to pay off first. For example, you can pay off the card with the highest interest rate or the card with the smallest balance.
    • There’s no right or wrong, but paying off the card with the highest interest rate will get you out of debt faster.
    • However, you might need the psychological boost of paying off a debt first. In that case, contribute all extra money to your smallest debt.[1]
  2. Talk to your creditor. You’ll only be able to pay off your debt early if your extra payments are applied to the principal. Some lenders will apply any extra money to your next month’s payment, which you don’t want because some of the money will go toward interest. Make sure payments above the monthly minimum are applied to principal.
    • Also check if you must pay prepayment penalties.[1] These penalties will undermine your ability to get out of debt quicker. Ideally, you won’t have prepayment penalties.
    • Also check whether you can make more than one monthly payment. Some creditors might not let you, so you should find out ahead of time.
  3. Make weekly payments. You don’t want your snowflakes to melt. Accordingly, you need to direct all savings toward your debts as soon as possible.[7] If your creditor will let you make daily payments, then pay any day you find yourself with a couple extra dollars. At a minimum, you should try to pay weekly.
  4. Turbocharge your repayment with debt consolidation. If done right, debt consolidation can save you money and help you pay down debts faster. You take out a loan for the full amount of your debts and pay them off. Then, you only have one payment to make. The loan should have a lower interest rate than the debts you paid off.
    • The easiest way to consolidate credit card debt is with a Find Credit Card Balance Transfer Offers. Many offer an introductory 0% APR for up to a year or longer.

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