Students Loans and Debt Snowflaking

You may have heard of debt snowballing: First, figure out the maximum amount you can pay toward debt each month.

Second, add all the minimum payments on your debt together and subtract from your maximum affordable payment. Third, determine which debt needs to be paid first, second, third, and so on. Finally, pay the minimum amounts on all your debts each month and the extra toward only one debt at a time.

Debt snowflaking is almost the same concept except from the income side. Every extra dollar you find or earn throughout the month is immediately paid toward the top debt. By paying even a few dollars out right away, you avoid the trap of saving the money up until the end of the month and probably spending it on something else.

So, you attack the debt snowball with multiple income snowflakes. Learn how to compare part-time pay to weekly or monthly earnings with this paycheck calculator.

Where to Find Those Extra Snowflakes

No amount of extra income is too small. Sell your spare couch on Craigslist for $75, recycle that aluminum cluttering your garage for $10, and return that too-small sweater for $65. Transfer the extra $150 immediately to your top debt. Take small actions like this as often as possible during the month and you can make several hundred dollars “magically” appear.

A yard sale generates tons of snowflakes. Getting your cousin to repay that small loan from five years ago produces even more. Work an hour of overtime, babysit the neighbor’s kids, rake an elderly friend’s lawn—even $5 here and there adds up in a short time.

The key to snowflaking your debt away is to pay the extra out right away—the same day, if possible. Check with your creditors to make sure multiple small payments are allowed; you may need to drop larger amounts once a week instead. Do your best not to stockpile because if the TV suddenly breaks and you have money in savings, guess where that money will go? Not toward your debt, if you’re like most people. So, keep making those small payments, even if they’re just a few dollars at a time. Your top balances will fall faster and you may save on interest and other fees.

History of the Snowball Debt Reduction Method

Dave Ramsey invented the snowball method (paying larger amounts on one debt at a time until they’re all knocked out). Though there’s some disagreement about how to order your debts most efficiently, Dave Ramsey suggests starting with the smallest one and forging ahead from there.

Combine the snowball effect with the snowflake effect and you have a powerhouse combination toward becoming completely debt-free. The extra snowflakes vary from month to month, but every little bit counts.

And Once Your Debt Is Snowflaked Away…

The true beauty of the snowflaking technique is that it doesn’t have to stop when your debt is paid. Put these magical extra dollars away in a savings account (along with your snowball money, if you like) and build a cushion for your family. Once you’re comfortable, invest your free money. Through smart and simple lifestyle changes like this, you can achieve what you once thought impossible: a debt-free life with a good start on savings!