Debt snowflake method: How can you use it to clear debt?

A snowflake is very small in size and looks as it can hardly make any difference. But when many snowflakes clump together, they can become a snowball. When even more snowflakes gather together, they can cause a blizzard or cover an entire mountain.

The debt snowflake method focuses on generating small sums of money, either by saving from regular expenses or earning extra income. These small amounts can be pooled at the end of every month for additional debt repayment over and above the minimum payment.

When this strategy is followed every month in a disciplined manner, a person can become debt-free much earlier than they would if they continue making the minimum payment on outstanding loans. It is one of the easier ways to pay off debt.

How the debt snowflake method works

While using the debt snowflake method to pay off debt, you have to take the following steps:

1) Gather small sums of money
2) Save them in a jar or savings account or both
3) Use the accumulated amount at the end of the month to pay off debt

Related: Tomorrow Makers' Guide To Becoming Debt-Free In 6 Months

Now, let us look at each of the above three steps.

1) Gathering small sums of money

You need to start gathering small sums of money. You can do it in two ways:

• Saving money from regular expenses

You can save money from regular expenses by doing the following:

a) Buy groceries online or offline in the first week of the month when most merchants announce a sale with discounts and cashback
b) While dining out, purchase discount vouchers in advance and use them at the restaurant
c) For movies, book tickets using debit/credit cards with BOGO (Buy One Get One) offers
d) Buy garments once in 3-4 months during a sale (Independence Day, Diwali, etc.)

• Earning extra income

You can also gather additional money by earning extra income. For example, if you are working as a personal finance advisor, you can generate additional income by:
a) Starting a blog and earning advertising income
b) Writing paid blogs for others
c) Conducting paid online/offline training

2) Saving money in a jar or savings account

The small amounts of money you collect either by saving from your regular expenses or earning an extra income should be stored safely. You can save this money either in a jar (as cash) or in a separate savings account, or both. The money needs to be kept separately as there will always be a temptation to use it for regular or ad hoc expenses.

Related: 6 Ways To Pay Off Your Toxic Debt

3) Using the accumulated amount for debt repayment

At the end of the month, all the cash accumulated in the jar may be deposited in a savings bank account where you are collecting the extra income. The entire money may then be used to repay the outstanding debt.

If you have multiple loans, you may prioritise the repayment thus:
a) Loans that have the lowest outstanding amount may be repaid first, or
b) Loans that have the highest interest rates may be repaid first

Related: Debt Payment Strategies Every Woman Should Know About

Last words

Depending on the amount you save every month, the debt snowflake method will help you repay some loan amount every month over and above the minimum repayment. If you keep following this strategy every month in a disciplined manner, it will help you become debt-free much sooner than you would by making the minimum repayment. So, if you have multiple outstanding loans, it is time to get going with the debt snowflake method, become debt-free at the earliest, and enjoy financial freedom.