Have you heard of the snowflake method of debt repayment? It’s basically a a variation of the snowball debt repayment method. Jaime over at I’ve Paid for This Twice Already says that it is “small amounts of money saved or earned that are applied directly to debt or into savings before they melt away into who knows where”. For me that works out to every $20 that doesn’t get spent paying someone or the Chinese food takeout guy. Do you know how much that stuff adds up?!
Anyway so I looked at the payments that I’ve made all over the place this month and I’ve had snowflakes go to my student loans, the car note, and the personal loan. It isn’t much but every extra payment that I’ve made went to paying down interest so that when my regular monthly payment hit more of my payments went to principal reduction instead of interest. If I can make multiple snowflake payments in a month I can steadily reduce my average daily balance which in turn reduces my interest payments. Nowhere was this more evident that the HELOC. The interest was around $125. I paid the $125 and then my tax refund payment of $700 and the full $700 when to principal. Not one penny went to interest. So next month the interest should be lower than $125 since I reduced my balance.
So would you like to join me in a snowflake challenge? Let’s see how many times we can get to $20 and send that payment off somewhere. I’m going to include any way that we make any extra money. Does someone pay you back the $5 that they owed you? Did you get an unexpected discount? Did you get a rebate check? Did you pack your lunch and save money? All of those things count. So let’s see how many times we get to $20 and check in at the end of the week. I’m counting on you all. I can’t do this alone.
Oh and if you want to learn more about snowballing and snowflaking take the primer.