Making minimum debt payments is, as we’ve pointed out in the past, usually a bad idea. But maximizing your payments is a pretty good idea (assuming you already have an appropriate rainy day fund), and “snowflaking” is one method of helping fight the most powerful force in the universe.
Snowflaking essentially means that you take any and every little bit of extra cash you have—perhaps money you’ve made outside of your normal job or have left over from an expense you over-budgeted for—and put it towards debt payments. Canceled an unnecessary monthly subscription? Complete a small side project? Bank error in your favor (or not)? Add it to your debt payments, and the “snowflakes” will create a snowball effect on your debt.
I’ve Paid For This Twice Already, the blog that popularized the term, points out that increasing your debt payments by small amounts can have a major effect. For example, a $5,000 debt at 20% interest can be paid off 6 months earlier if you can find a way to pay an extra $10 per week.
Paid Twice recommends “reacting immediately” by making these extra debt payments as you get them – whether they’re large or small. Otherwise they could get lost and end up sitting in your change purse or checking account.
Hat-tip: Lifehacker
