As I’ve been navigating the personal finance universe, one term keeps showing up: snowflaking.
Snowflaking is a derivative of the Dave Ramsey concept of the debt snowball. This is the method we’ve used to pull ourselves out of the massive crater of debt we found ourselves in several years ago. It works, too! It’s nice to be able to check off one debt after another, knowing that you’ll have that much more money to put towards the next one. Snowflaking, though, was a new idea for me.
The idea of a snowflake is that you can add every little bit of money you can towards your debt. There’s an excellent explanation over at I’ve Paid Twice for This Already. I love this idea! It really is proof that every little bit helps. But where can you find the money to create a snowflake?
Snowflakes are everywhere! The Family CEO offers a good list of ideas, and, if you look closely in the comments section, you’ll see my contribution: rounding up payments. We do this with three of our remaining debts–car payment, student loans, mortgage. It’s a really easy idea and doesn’t require any extra work except at the budgeting phase. Here’s how we do it: We take whatever the payment is and round it up to the nearest whole number.
For instance, my husband’s student loan payment is $279.23 and we pay $280. Our mortgage payment is $1164.34; we pay $1165. Our car payment varies because the minimum payment goes down each month due to the rounding up of the payment, but we pay $330 each month regardless of the minimum. It doesn’t seem like a lot of extra money but right now we are focused on paying off our home equity loan and all of our second income is going towards that. Adding the few extra pennies does make a difference and, psychologically, it makes me feel like we’re adding at least something extra to our debt payments. It also makes balancing the checkbook that much easier!
Other places we’ve found snowflakes are:
- Part-time jobs and periodic employment (ex., test proctoring)
- Reducing the cable bill
- Keeping a change jar
Since you can’t have a snowball without a snowflakes, it’s important to find those snowflakes any place possible.
What are some of your creative snowflakes?