The “Snowflake Method” Turns Spare Change into a Powerful Debt Reduction Tool

By Mike Peterson
In June 24, 2013

Chances are, you’ve heard of the “snowball method” for paying down credit card debt.  In a nutshell, the snowball method encourages you to tackle credit card debt by focusing on one credit card at a time.  By prioritizing which card you pay first and increasing your payments over time, you build up enough debt-repayment momentum to get all of your credit cards down to a zero balance. 

The snowball method is a solid strategy for folks struggling with multiple credit cards.  And, it’s satisfying, psychologically speaking.  Because you pay off your smaller debts first, you feel as though you’ve made progress – and that feeling helps keep you motivated when it comes time to tackle your larger debts.  (You can read more about the snowball method and how it works in this post.)

I’m a big fan of the snowball method – but I’m also always on the lookout for new and interesting debt repayment ideas.  My latest discovery is a micropayment strategy called the “snowflake method.”  It’s a topic that has popped up on a lot of finance blogs recently – and I like what I’ve learned about it so far.  I think it could be effective on its own or as a supplement to another strategy like the snowball method.

Intrigued?  Read on to learn more about what “debt snowflakes” can do for you.

What is a “Debt Snowflake”?

Most debt repayment strategies – including the snowball method – encourage you to knock out debt by paying as much as you can in a single payment every month.  You make a budget, decide how much above the minimum you can afford to pay each month, and start chipping away at your credit card balances.  There are a variety of approaches you can take. Some, such as the snowball method, encourage you to start by attacking the cards with the smallest balances.  Others argue that you should look at the highest interest rate instead.  At the end of the day, though, most of these strategies revolve around making a large, single payment every month.

The snowflake method, by contrast, encourages you to make several “micropayments” throughout the month.  Basically, any time you find yourself with extra cash, you should use it to make a payment on your credit card.  You can pay $2.50.  You can pay $200.  You can pay $19.95.  You can make three payments.  You can make 30 payments.  The only rule of debt snowflaking is, if you have extra money (and by “extra,” I mean money that is not going toward some part of your budget) you should use it to pay your credit card.  Right away.

Small Payments = Big Payoff

You might be wondering, “Why make a bunch of micropayments?  Why not just save up the $2.50 and the $200 and the $19.95 and make one large payment instead?”

The answer to that is simple:  Because if you wait and save up to make a large, traditional credit card payment, that extra money might just slip through your fingers.  Think about it for a minute:  If you have an extra, say, $15 in your wallet, it’s really easy to just spend it.  After all, it’s just $15. 

But if you take that $15 and immediately use it to pay your credit card, you’ve just chipped a small amount off of your monthly payment.  If you do that again the next week, and the next, all of those small payments start to stack up – even if you only pay a little bit each time. 

By using snowflaking in addition to your regular debt repayment strategy, you’ll be able to pay down your debt even faster. 

Want to know how much debt you can pay off with snowflake-style micropayments?  Try the snowflake method for a month.  Any time you end up with a little extra cash, use it to make a small credit card payment.  Track every snowflake payment you make, even it’s only a few dollars, and see how much you’ve managed to pay at the end of the month.  You might be surprised!

Looking for Snowflakes?

The great thing about using the snowflake method is that you can pay any amount at any time.  Don’t think you have much extra cash?  Think again.  Here are a few common sources of cash you can use to fund your credit card micropayments:

  • Money you earn selling stuff on eBay, Craigslist, or other sites
  • Bonuses from work (remember, a snowflake can be more than a couple of dollars!)
  • Change left over from cash purchases
  • Your tax return
  • Money you earn from side jobs
  • Spare change you find around the house
  • Money that you have left over from the “entertainment” or “miscellaneous” portions of your monthly budget

Mike is the author of “Reality Millionaire: Proven Tips to Retire Rich” and he has been published in a variety of local and national publications including Entrepreneur Magazine, Deseret Morning News, LDS Living Magazine, and Physicians Money Digest. He holds a B.S. in business administration from the University of Phoenix.