Wipe Away Debt Problems With Debt Snowflakes

by Silicon Valley Blogger on 2012-06-2711

I’d like to share a great concept or strategy to pay off debt called “Snowflaking”, which I found well described in a few personal finance blogs. The concept of snowflaking is an interesting spin off from Dave Ramsey’s debt snowball strategy for eliminating debt. I discovered that it was originally discussed over at the Debt Support Group at iVillage and has been well promoted by a fellow personal finance blogger, Jaimie at I’ve Paid For This Twice Already.

So how do these debt strategies work? Dave Ramsey’s debt snowball approach instructs fellow debtors to make a list of their debts from the smallest to the largest. Then, you work diligently to pay as much extra money to the smallest debt on the list while paying the minimum payments on everything else. Snowballs are essentially made of snowflakes. If you have ever watched a snowfall, you know that the tiny flakes can accumulate to a great deal of snow very quickly. From this, you can see where the financial concept of snowflaking got its name. Debt snowflaking refers to taking little bits of money that you make each month and applying them directly to your lowest amount of debt.

snowflakesImage from KimberlyLace.com

Wipe Away Debt Problems With Debt Snowflakes

Most online sites recommend paying the extra money towards your debt as quickly as you receive it. If you really think about this concept, it makes sense. If you are decreasing your debt on a daily basis, you are also decreasing the amount of interest you are going to be paying at the end of the month because interest is compounded daily on your credit card. Therefore, if your daily balance decreases through the month, this will equal less interest accrued on your credit card statement at the end of the month. Most credit cards offer an online payment option that allows you to do this. However, some cards may limit the number of payments you can make within a certain period. For instance, my American Express card will only allow you to make payments every 72 hours.

Where Do You Get The Extra Money To Begin Snowflaking?

Here’s one basic question that a lot of readers have: where do you get the discretionary income to apply towards snowflaking? Most “snowflakers” (those who engage in snowflaking) get extra money by selling items on eBay, on Craigslist, and at yard or garage sales. Some people have also tried to make money blogging or have been able to pick up extra income by taking online surveys or by pursuing special offers and cash bonuses online through various sites. There are also cash back rewards sites such as Ebates and BigCrumbs, which can help with additional savings. If you’re at all curious, you can check our review of the Ebates site here, as well as our BigCrumbs review here. Many snowflakers also take the money they’ve saved by using coupons or other offers, and apply this money that they would have normally spent, to their snowflaking money. You can even apply cash gifts or work bonuses to your snowflaking stash.

What Are The Pitfalls of Debt Snowflaking?

When you start making some extra income, it becomes quite tempting to start spending it on frivolous things. This is why it is critical that you keep accurate and detailed records of the extra money coming in from outside sources. An excel spreadsheet or a simple list on paper is a great way to do this. There was a month when I tried this concept, when I got a large yellow poster board from the dollar store. I hung the poster board in my hall, along with a marker and string attached to the board. Every time I brought in a little extra money, I wrote it on the board. I sold items through eBay and did a few other transactions. Before the end of the month, I had made an additional $700 and I was able to pay off my American Express card balance in one month.

Also, when making this extra money, be sure to keep it in a place where you are not tempted to spend it (check out this SmartyPig review for some ideas; SmartyPig and similar services are perfect for your savings goals). Of course, if you pay the snowflaking money towards your debt immediately, you can bypass any temptations very easily.

Debt snowflaking is a great strategy for those just getting started with paying down debt. It provides an easy way to decrease small debts, sometimes within a month’s time. You will be very surprised at the amount of money you accumulate if you keep track of your cash as soon as it comes into your possession. For those interested, here are additional ideas for paring down your credit card debt.

Created April 15, 2010. Updated June 27, 2012. Copyright © 2012 The Digerati Life. All Rights Reserved.

{ 11 comments… read them below or add one }

basicmoneytips April 15, 2010 at 6:50 pm

Interesting concept that I had never heard of. I think the important lesson is make sure you can apply your extra income to the correct place and not spend it on other things. However, at somepoint you have to the hit the big debt – hopefully sooner than later.

Toothhater April 15, 2010 at 6:58 pm

I just went bankrupt and waited the seven years, worked out ok.

Chris - Be Debt Free America April 15, 2010 at 11:39 pm

You’ve some good ideas about finding extra money to put on that debt. Makes me think that you could sign up to sell blood, work with the census for a few months, or even be a weekend evening waitress. Just a few ideas. Also, I think it would make sense to have a list of your debts where you can see them. Being able to cross off a debt from that list once it is paid would yield a bit of satisfaction.

Guy G. April 17, 2010 at 9:23 am


This kind of reminds me of Dave Ramsey’s debt snowball method.
I think it’s really important to focus on one debt first. Obviously make the minimums on all of them if you have more than one, but focus all extra dollars towards the one card.

Here’s another one of those great tips on budgeting. It’s really important to note, don’t stop contributing to your emergency fund while you eliminate debt. Nothing worse than an unexpected expense derailing your debt elimination efforts.


laura April 17, 2010 at 4:35 pm

As much as I like Dave Ramsey, he did not invent the debt snowball term. It’s okay to say that’s where you first heard the term, though. I have many personal finance books that are 40 to 50+ years old and they use the debt snowball phrase.

Silicon Valley Blogger April 17, 2010 at 4:50 pm

The concepts have been around for ages but some people have clever labeled these practices with “cute” and memorable names. I guess you can call that marketing!

Amanda April 17, 2010 at 5:34 pm

I love Dave Ramsey. He knows his stuff. Not sure Dave Ramsey said he invented the term, but he did bring it into main stream to help many people.

James April 19, 2010 at 2:29 pm

Hi… I didn’t realize that this had a name…

I have a lot of debt from an offline business I used to run, which unfortunately went bad… I’d been using the same concept as you talk about here, to pay off my debt.

Financially, it’s not the best choice, but when we talk about debt there’s more than finances that comes into play…

I started out with the small loans and the satisfaction of closing a “case” is really great, so that motivated me to keep paying off my debts with higher payments… Hope that made sense 🙂

Anyway, Now I only have two large loans, but I’m okay with that… When I started out, I had close to 30 loans in total…

By the way, really like your blog 🙂

Medical Assistant April 19, 2010 at 2:30 pm

I really like this idea. It makes perfect sense to eliminate the smaller debts first so you can eventually focus on the larger ones. In my house there is no such thing as extra money as long as there are debts to pay, but it’s really hard to not enjoy a little bit here and there.

Silicon Valley Blogger June 27, 2012 at 6:46 pm

This whole practice is a foolproof way of doing away with ANY kind of debt, even the big ones! I’ve used this idea over and over to pare down my mortgage and it has made a huge difference — we won’t be having a mortgage for very long now. So after you’ve worked out your credit card debt, you can go on to snowflaking away your other loans.

Charlotte@EverythingFinance June 29, 2012 at 3:54 pm

Anything that works to pay down debt is a good thing. I think the trick here is to not spend the extra money before you have a chance to apply it to the debt.

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