How to Use the “Snowflake” Strategy for Debt Repayment

When you’re facing a giant mountain of debt, it feels almost impossible to overcome it. When your total debt exceeds your household income, it can feel like debt is just going to be a part of your life. It can seem as though, in order to live your life, you’re going to have to constantly hand money to the banks until you’re old and grey.

It doesn’t have to be this way. Sarah and I paid off more than $10,000 in credit card debt, two car loans, several student loans that totaled more than $30,000, and a home mortgage over the course of about five and a half years, taking us to complete debt freedom. We did this with three children and with a car replacement cycle right in the middle of that five year period.

Snowflakes were a big part of that success. What are snowflakes? Well… let’s step back from that a bit first.

The First Step: Make a Debt Repayment Plan

If you’re facing a big pile of debt, the first and most important thing you can do is to build a debt repayment plan. This comes before anything else.

The process is pretty easy. You simply take all of your debts, seek ways to consolidate them and reduce their interest rates, and then order them by interest rate with the highest rate first. Then, you make a minimum payment to all of your debts, then strive to make a big extra payment to that debt with the highest interest rate.

For more information, read my detailed guide to making your own debt repayment plans.

Snowballs and Snowflakes

The idea of a debt repayment plan was in part popularized by radio host Dave Ramsey, who modified the idea a little bit (by encouraging people to sort their debt by balance size) and referred to it as a “debt snowball.”

Snowflaking is just a cute term for an idea that works well in conjunction with any debt repayment plan.

In simplest terms, snowflaking refers to any little action you take that immediately saves money, then that money is directly applied to the debt on top of your debt repayment plan.

Here’s a simple example. Let’s say you usually spend $5 buying food from the food cart outside of your workplace. One day, instead of spending $5 at that cart, you heat up your leftovers from the night before. Boom – there’s a $5 snowflake. You then add $5 to your next extra debt payment.

Approaches for Actually Making the Payments

The real trick with snowflakes is to make sure that you actually use that money for extra payments. There are a lot of ways to do this.

One approach is to immediately make a money transfer (on your phone) each time you make a “snowflake.” In other words, you sit down at your desk and immediately execute a $5 extra debt payment. Most banks will allow you to make several small payments like this to the same company each day.

Since that meant stopping for a few minutes each time I had a snowflake, I used a different approach during my own financial turnaround. I kept a pocket notebook and whenever I had a snowflake, I wrote it down in that notebook. At the end of the week – I usually did it on Saturday – I’d sit down, add up all of my snowflakes from the past week, and then make a single extra debt payment for that total amount.

I don’t really advocate waiting longer than a week to take some kind of action on that snowflake. If you wait longer, you’re greatly increasing the chances that you’ll forget about the snowflake or that you’ll find that you have “extra” money in your checking account and spend it on something else.

Zen and the Art of Finding Snowflakes

Our lives are chock full of spending decisions. Not only do we have lots of situations where we open our wallets to spend money, we also make tons of choices where we choose not to spend money or when we choose to use a resource that we’ll have to pay for later.

Thus, we have tons of opportunities to choose to spend less. Sometimes, those choices won’t affect our life quality at all. At other times, it might not be worth it and we’ll choose to spend money anyway.

The real key here is mindfulness. The more aware we become of our choices and what we would do if we weren’t focused on paying off debt, the more snowflakes we’ll see and accumulate.

For example, some people might be so caught in the routine of heading to the food truck and spending $5 for lunch that they don’t even think about it or consider it a moment where they could make a different choice. They’ll buy little things at the checkout or leave lights on when no one is awake or home, never thinking about how a slightly different action could save them money without affecting their quality of life.

You have to be mindful of what you’re doing all the time in order to get the most out of snowflaking.

The Psychological Benefit

For me, the benefits of snowflaking went far beyond the money. The psychology of it was just as valuable.

What do I mean by that? Snowflaking made it feel like I was truly taking action on my debts several times each day. This left me feeling in control of the situation. I wasn’t just hoping for the future for this problem to go away. I was doing something right now to make it better.

Thirty Six Opportunities for Snowflakes in Your Life

Need some ideas for getting started? Here are thirty six ways in which you might find snowflakes in your own life.

1. You can save aluminum cans. In states where there’s a nickel or dime refund, you can turn ten or twenty cans into a dollar. In other states, you can still recycle your cans and make a few pennies per can.

2. Try having a yard sale. Go through your closet and find the things that you don’t really use any more. Then plan a yard sale where you put up a few advertisements and then sell all of those things right in your driveway or front lawn, putting all of the proceeds toward your debts.

3. Alternately, sell that stuff on Craigslist.

4. Make several identical meals in advance. This lets you take advantage of bulk buying as you’ll be able to buy the large container of noodles or sauce or cheese. Put the saved money from those bulk purchases toward your debt. For example, if buying in bulk causes you to buy a big container of lasagna noodles for $5 when the smaller packages would have cost you $8 for that many noodles, put the saved $3 toward your debt.

5. Air up your car tires, then put 1% of your fuel costs toward your debts for the next month. Most Americans keep their tires underinflated and each PSI that you’re lacking eats up 1/8th of 1% of your fuel efficiency. If you add just two PSI to each tire, your fuel efficiency goes up by 1%. If you spend $100 on gas thanks to commuting each month, then there’s an extra dollar each month toward your debt.

6. Make a bunch of bottled coffee at home so you can grab a drink and go each morning instead of stopping at the coffee shop. Just make a big batch on the weekend and pour it into five individual bottles, then warm one up each morning just before you leave. If you can make a $2 latte at home when it normally costs $5 at the coffee shop, that’s $3 a day.

7. Keep your eyes on the ground and pick up change. Save your extra change in a change jar and then cash it in every few months, putting that cash toward your debt.

8. Skip a regular meal you’d eat out and make something very simple at home, like spiced beans and rice. You’ll save $10 (or more) on your meal which you can immediately snowflake.

9. Talk to your physician about generic medications if you have a regular prescription. Switching to a generic medicine can save you a shocking amount each month.

10. Shop around for insurance. If you can save $100 a year on your insurance costs by shopping around and finding a more cost-efficient provider, you can apply that savings as a snowflake. Just use the amount you save on each subsequent insurance payment.

11. Skip a beverage and drink water instead. If you typically drink a soda each day, skip that soda and drink some water instead, then bank the money you saved by not drinking that soda.

12. Buy store brands as much as possible. When you actively choose to buy a store brand instead of a name brand, you can put the difference in price directly toward your debt. Generic ketchup can make a surprising difference.

13. Make convenient snacks in advance. For example, you can make microwaveable pockets quite easily at home for less than a dollar’s worth of ingredients. Make a bunch and put them in the freezer, then “snowflake” the money you saved compared to buying that number of convenient foods at the store.

14. Don’t smoke. Every time you smoke a cigarette, you’re essentially burning a quarter (or more). Whenever you’d normally light up, avoid the temptation and drop a quarter into your snowflake jar.

15. Do a careful price comparison and find the best grocery store bargain. Make a list of the twenty five most common things you buy, then see how much those items cost at different grocery stores. Switch to the cheapest one and then each time you buy a week’s worth of groceries, bank the difference between the prices of those items versus your old store.

16. Make some bread. Try making a loaf of bread from flour and yeast. It’ll be at least a dollar cheaper than a loaf from a store, so put that dollar in the kitty and enjoy some truly delicious bread.

17. Shop used when you need an item. For example, does your son or daughter need a hockey stick? Instead of buying online, hit a secondhand sporting goods store and see if anything meets your needs there. If you can save $10 by buying something used versus buying the new version, that’s $10 that goes toward your debts.

18. Buy holiday supplies right after the previous year’s holiday. For example, buy all of your Christmas decorations and wrapping paper for the next year on December 28th of the previous year. Everything will be on sale, so bank the amount you saved for your next extra debt payment.

19. If you get a magazine or newspaper that you rarely read, cancel that subscription. Then contribute that $10 or $20 (or more) each year toward your snowflake payment.

20. Create some low cost snacks around your house. Do you like munching on those little “100 calorie” packs? Use a bunch of small Ziplocs and a big bag (or box) of that treat to make your own 100 calorie packs (by weighing the snack). It’s way cheaper to buy the big container and make your own little packs and you can save the difference.

21. Get into a brown bag lunch routine. Take leftovers to work each day and, if that doesn’t work, take a very simple lunch that you like. For me, my “default” lunch is two poached eggs and toast, which costs less than a dollar and can actually be reheated really easily. Compare that cost to the cost of your normal lunch and put the difference toward your debt.

22. If you have kids, try a babysitting swap. Rather than hiring a babysitter, talk to friends that also have children and see if they will do a “swap” with you where you watch their kids one evening, then they watch your kids for an evening. That eliminates the cost of a babysitter, which you can then bank toward your debts. (Of course, don’t turn this into a more expensive date!)

23. If something’s broken, like a toilet or a toaster, try repairing it yourself. If you succeed, you can turn the money you saved by not needing a repairman into a great extra debt payment. If not, then you’re stuck calling a repairman anyway.

24. Replace your incandescent light bulbs with LEDs. Modern LEDs have amazing light quality that’s comparable to normal incandescents. They also use only a fraction of the energy. So, whenever you replace a regular incandescent with an LED, your energy bill should see a little dip. You can capitalize on that with snowflaking by contributing the difference between your most recent energy bill and the one from the year before (or the month before) to your debt repayment.

25. Move. This might seem like a stiff life change, but it’s one that can really make a difference with your debts. If you can save $100 or $200 a month on rent or house payments just by moving, you can push all of that straight toward your debts.

26. Try out a free community event instead of going out. If you’re tempted to go out to the movies or do anything that costs money, look at what’s on your local community calendar instead. Are there any free activities going on that would be quite fun, too? If you choose the free one, you’ll still get to have a ton of fun while also putting some money toward your debts.

27. Hit the library. A book checked out from the library is one that you didn’t buy, so you can apply that savings toward your debts. The same is true for the DVDs that many libraries provide – checking out a DVD instead of buying one is pure savings.

28. If you’re about to go on a road trip, pack food and water. If you can stow away $2 worth of food and water and it replaces a $10 or $20 stop at a fast food restaurant or a gas station, then you can easily put that $10 or $15 toward your debts.

29. Spend some time parsing your bills. Look for line items that you don’t understand, then call up your cell phone provider or your energy company (or the provider of whatever bill you’re looking at) and ask to have those fees and charges removed. If they drop even one charge, then you have an amount that you can contribute each month to your debt repayment.

30. Practice good razor usage. Make sure your razor is dry after every use and sharpen it every once in a while using a RazorPit. If you can move from buying ten razors a month to buying three or four, you’ve suddenly found more money for your debt payments.

31. Make your own household supplies. Make your own window cleaner by just putting vinegar in an empty spray bottle. Make your own homemade laundry soap by shaving a bar of soap and mixing it with half as much borax and half as much washing soda. There are countless recipes out there and each will shave a little bit of spending out of your life.

32. Don’t speed when you drive. In general, fuel efficiency decreases rapidly over 50 miles per hour, reducing your efficiency by 1% or so for each additional mph. On top of that, braking and accelerating devours your fuel efficiency. If you can keep your speed below or at the speed limit and maybe reduce your braking and accelerating in town, you’ll easily be able to save 5% of your fuel bill.

33. If your home is drafty at all, air sealing your home can reduce your energy bill by 20% or more. It’s a simple process (well explained by this guide) that just eliminates those drafts and keeps your heat (and your cool air) from simply vanishing out the door. That means your furnace or your air conditioner doesn’t have to work nearly as hard.

34. Alter your commute. If you can find a different route that uses a bit less fuel than your previous route, then that’s going to be a daily savings. Start by trying to figure out the shortest possible route to work and then figure out how much gas you’re saving.

35. Try reducing or eliminating your cable bill. Not only will you find a bunch of additional free time, you’ll also have a nice healthy lump of cash to save each month. Still want television? Over the air signals are free and Netflix is only $9 a month.

36. Refinance your debts. If you can get a lower interest rate on your debts over the same term, your monthly payments will go down with no drawback. Then, you can take that savings and apply it to whichever debt has the highest interest rate, double dipping on your savings.

Final Thoughts

Snowflaking is valuable in so many ways.

First, it gives a very direct sense of “taking action” on your debts, usually several times a day. Your debt isn’t some nebulous thing you encounter once a month. It’s something that you actually get the chance to reduce over and over each day.

Second, it’s flexible in that you can decide whether a particular snowflaking tactic is “worth it” right now or not.

Third, it can establish new patterns in your life. You might discover better ways of doing things which will reduce your spending permanently and make it easier to escape debt and never go back.

Finally, it directly eliminates your debt. A single snowflake directly means a reduction in your debt, no doubt about it.

Yes, these steps are little, but that’s the point. They’re simple choices you can make without completely altering your life. Instead, it empowers you to make better choices every day and really take charge of your debt.

Plus, it also works for saving for any goal. Trying to build up an emergency fund? Snowflake. Trying to save for vacation or for a car purchase? Snowflake. The only difference is you dump money into a savings account instead of into a debt payment.

Don’t let those little moments slide by. Take action. You’ll feel great and your debt will shrink a little. What’s not to love?

Trent Hamm

Founder & Columnist

Trent Hamm founded The Simple Dollar in 2006 and still writes a daily column on personal finance. He’s the author of three books published by Simon & Schuster and Financial Times Press, has contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and his financial advice has been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.