Get Rid Of Your Credit Card Debt With Snowflakes!

Written by imoney

Photo: Shutterstock

A few months ago, we showed you the snowball method of dealing with your credit card debt. Today, we’re going to show you the “snowflake method”, which, when used in conjunction with any debt repayment plan, can get rid of your credit card debt faster.

The snowflake method is easy: every time you have any extra money, you use it to pay your debt ON TOP OF your already planned monthly payments. Basically, any time you have extra money, you put it towards your credit card debt.

Here it is in action: let’s say you have an extra P100 this week (which we’ll call a snowflake). Instead of spending it, or keeping it in your wallet, you immediately use this snowflake to pay off a small chunk of your P20,000 credit card debt. Maybe you won a raffle and got P1,000. Put that snowflake towards your debt, too. Big or small snowflakes, it doesn’t matter — when you have extra money, pay off your credit card debt with it.

Why should you do the snowflake method?

You might be asking, “Why make so many small payments? Why not just save it all up and then make one big payment at the end of the month?”

Well, it’s because that money might slip through your fingers. Think about it — it’s really easy to spend your extra P500 in the blink of an eye. That money could easily turn into a new blouse, or a dinner out.

But if you take that P500 and immediately use it to pay off a chunk of your credit card debt, you’ve already started to chip away at the huge amount. Add enough of these snowflakes to your regular debt payment plan, and your total debt will shrink faster.

The key to the snowflake method is using the extra money to pay your debt before you can even spend it.

Try the snowflake method for a month and see how much smaller your debt gets, faster. At first, making many tiny payments may not seem to make much impact on your credit debt, but these little moves can have a big impact on your repayment time. For example, if you only paid P1,000 a month for your P20,000 credit card debt, it would take you 31 months to pay it off completely. But if you’re able to snowflake even just a total of P200 a month to add to your P1,000, it would take you just 24 months! Not only that, you’ll save over P3,000 in interest payments.

How can you use the snowflake method to shrink your debt?

Photo: Shutterstock

1. Keep making your regular payments. Make your regular payment by the due date every month, just like you normally do. Staying on time with your regular payments is essential.
2. Every time you have extra money, immediately transfer this to your credit card debt. With online banking, you can easily transfer P50 (or however much your snowflake is) to pay off your credit card account. Make sure you check with your bank whether they allow multiple payments per month without extra charges.
3. If #2 isn’t doable, keep a record of your snowflakes and make one big payment to your credit card at the end of the week. If you can’t get the money to your credit card issuer immediately, make sure you keep track of how much you’ve snowflaked every day, then pay that lump sum at the end of the week. Let’s say you managed to snowflake P50 on Monday and P100 on Thursday. On Friday, make a payment of P150 to your credit card. Don’t let more than a week pass by. If you wait too long before applying the snowflake to your debt, you might forget to do it at all, and end up spending your “extra” money on a frivolous purchase.

Where can you find money to snowflake?

• Sell your unused stuff. Hold a garage sale or sell your stuff online, and apply the proceeds to your debt.
• See if there’s leftovers from your budget. Maybe you budgeted P1,000 for entertainment this month and only spent P800. Take the leftover P200 and apply it to your debt.
• Check out our list of 37 Ways to Save Money. The money you save from any of these 37 methods can be the perfect snowflakes. Let’s say you decide to skip your daily latte one day, saving you P120. Instead of keeping that money, immediately make a P120 payment to your credit card (or add it to your weekly snowflake tally).

These steps may be small, but that’s kind of the point. Using the snowflake method shrinks your debt without too much effort on your part. Besides, many snowflakes can add up to an avalanche, if you do it consistently enough. Keeping up the snowflake method can relieve your debt burdens and help you feel more in control of your finances. Why not try it and let us know how it goes?