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What is Debt Snowflaking?

May 18, 2014 by illinois

Have so much debt you don’t know what to do with it? How can you make a kink in that debt? Are you and your partner constantly arguing over the best method to use? There are many different ways to get your debt under control. One of the most popular methods is Debt Snowflaking. This is a simple method that shows you how to use your extra money to pay down on your loans. We’ll explore what it is and how it can help you.

Debt Snowflaking

How Does Debt Snowflaking work

This method is a spinoff of the Debt Snowball method. Put all your debt totals together, organizing from smallest to largest balance wise. You can then start making small payments which will help clear out your debt faster. Instead of making large payments once a month (the snowball effect) you make smaller payments (snowflakes) as often as you can. If you have extra money from selling something, or an extra job use that extra income to pay for debts. By paying more frequently in the long run you lower the interest rates. This also speeds up your payoff and you get a confidence booster because you’re finally making a dent. This method is all about taking small steps to get to that big win in the end, being debt free.

Steps to Begin Debt Snowflaking

Once you’ve figured out which method of debt recovery you’re going to us you can start using these steps:

  1. Collect all you debts and list their totals from lowest to highest
  2. Find a few ways to make extra money (sell things you don’t need, get a weekend job, do freelance work when free).
  3. Put all that extra money toward your debts as often as you can.
  4. Continue using snowflake payments until you’re debt free.

 

You can use this method with pretty much any strategy you use, just make sure you’re covering the monthly minimum. It can make it easier spreading those payments out throughout the month instead of making one large payment all at once. You’re paying the same amount but it’s in smaller chunks throughout the month. This is a great way to prevent “snowball fights” with your partner. Basically this is just making smaller payments to get your debt down quicker. These small payment allow for less interest in the overall loan, and you’re making payments toward the principal instead.

A Few Things to Know About Debt Snowflaking

With any debt payment method there are some things to be aware of when it comes to Debt Snowflaking. Listed below are a few things that you should know about snowflaking before you start using this method to get debt free.

  • Check for payment limitations – Some of your lender might have a limit on how many payments you can make in a month toward your loan. Check with them to see if you will get an extra charge for making multiple payments. Requesting that your payments go to the principal balance. If it doesn’t you’ll be paying for more interest than anything else. If there are no limits then feel free to make as many little payments toward your loans as possible to get them down little by little.
  • Use online payment methods and online banking when you can. With all the little payments you’ll be making a lot more transactions are going to be made. By using online banking you can process a payment through for free. However, not everyone will let you do this, so it’s a good idea to use online payment methods whenever you can. Using online methods also allows you to keep track of how much you’ve paid toward a loan and where that money is actually going.
  • Small steps aren’t always progress. Of course taking small steps is much better than jumping right in, but taking small steps can be like a giant leap too. You may not believe that small steps have a big impact on your debt relief but constantly throwing money at your loans will gradually get you to a debt free place you want to be. By making these small debts you will reduce the amount of interest you have to pay on a loan, allowing you to make small progress toward no more debt.

 

This is a simple method that can help reduce your overall debt. The Debt Snowflaking method is not for everyone but for those who can use it, it is a great tool to use. Just arrange your debts from smallest to largest and make as many little payments as you can. Always check for monthly limitations when making payments on a loan, use online banking, as it is free, and just allow yourself to take small steps. These small steps will eventually lead you to small progress and then to debt freedom.

Filed Under: debt management, personal finance tips Tagged With: Debt Snowball, Debt Snowflaking, get out of debt, strategies to get out of debt

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