How to Snowflake Your Debt and Avoid a Debt Avalanche.

A debt snowflake is a way of paying off debt that immediately captures small savings for use toward outstanding bills.

It sounds a lot like other strategies that aim to speed the arrival of your debt-free date, but it’s different:

In a debt snowball, you aim any extra money at the smallest bill first, racking up a psychological victory as you re-purpose that payment toward the next-smallest debt.
In a debt avalanche, you go after the highest-interest debts first, decreasing the total interest paid. It’s less rewarding in the short term but more efficient.

In both of those strategies, you are using money you have especially budgeted for debt payoff.

The snowflake method, on the other hand, finds tiny, day-to-day savings and uses them to make your zero-debt day come even sooner. It’s compatible with either the snowball or avalanche strategies. Like snowflakes, tiny savings collected over time can have a big impact. And you have to be quick to capture them: Snowflakes disappear fast.

Make the most out of found money

If you’ve budgeted carefully, you may think there are no more savings to be had.

But the small amounts of money you can snowflake toward debt (or an emergency fund) can come from less obvious sources like:

  • Splitting a 12-inch sub with a friend when you would have otherwise ordered your own 6-inch sub (potential savings: about $2!).
  • Discovering a $20 bill in a coat pocket (and before you take clothes to the cleaners or donate them, please check all the pockets).
  • An unexpected rebate check in the mail.
  • A yard sale.
  • Payment for jobs that are outside your normal budget (lawn mowing, baby-sitting, pet care, house-sitting).

You get the idea. We are not talking about big amounts of money here.

Nor are we talking about money accounted for in your budget; this is found money only. And you don’t want to divert the money you have allotted for your own discretionary spending — your budget won’t work without it.