The number of homeowner families with minor children dropped by 14% in the last 10 years

In the years prior to the housing crisis, it was the norm for a young family with children to have a home they could call their own, without needing to stress too much about the financial aspect of the situation. However, that is no longer the case. A new study published by apartment search website RENTCafe.com shows that fewer families are buying homes nowadays, compared to 10 years ago. The reason behind it is, of course, money. Due to this, the number of renters with children increased by 1.9 million (16%) in the past decade while that of homeowners with children decreased by 3.6 million (-14%).

Southern metro areas see the highest jumps in renting families with children

The majority of large metros witness more families with children choosing to rent and not buy. Charlotte metro leads with a 73% increase in the number of families with minor kids who rent but the metro has also witnessed an increase of 21% in homeowners with kids. Atlanta metro comes in hot in its heels, with an increase of 51% in the number of renting families and recording a drop of 11% in homeowner families with kids. Third is Phoenix metro, with a 42% increase in families who rent and a 12% decrease in homeowner families.

Homeowner families with children in the metro areas of Detroit, Riverside, Miami, Las Vegas, and Los Angeles registered the highest decreases of over 20%. There were only 4 metros witnessing increases in the number of homeowners with kids: Charlotte (21%), Houston (5%), San Antonio (3%), and Dallas-Fort Worth (1%).

Single-family home prices increased by 35% in the last 5 years, faster than rent prices

Looking at how home and rent prices increased in the past years, it seems that the median cost of a single-family home increased by 35% while rents increased by 20%. The area with the most striking difference in price changes is Detroit-Warren-Dearborn which witnessed a 155% increase in single-family home prices while rents went up by 12%. Another area worth mentioning is San Francisco-Oakland-Hayward where rents increased by 39% and single-family home prices by 80%. These markets and many others are following a similar trend, with home prices shooting up faster than rents. Other areas where single-family home prices increased considerably during the past 5 years are Las Vegas 74%, Portland 62%, Orlando 62%, Denver 61%, Tampa 60%, and Miami 60%.

There’s a need for more family-sized rentals to be built

Given the fact that home prices are increasing faster than rents, many families with children find renting the only viable option. This can only mean that there will be a higher demand for family-sized rentals (2 bedrooms or larger). In the last 10 years, single-family rentals increased by 3.6 million new units and the number of family-sized apartments went up by 1.1 million units.

Nationally, the apartments built between 2006 and 2016 were distributed as it follows: 52% were family-sized apartments, 41% were 2-bedroom apartments, 9% were 3-bedroom apartments and 2% had 4+ bedrooms.

Tips on Becoming a Successful Day Trader

If you are going to invest the time and effort needed to become successful at day trading, one of the first things you should do is master the lingo. Much like doctors and lawyers have their own language, so too does the world of the day trader.

Day Trading

The art of buying shares of stock with the sole intention of selling them on the same day.

The Professional Day Trader

The professional day trader is someone who makes their living and is licensed (with either a Series 6, 7, 63, 65 or 66). Keep in mind that these traders typically pay higher fees, and this is the reason why you must tell the regulators if you are a licensed professional trader. Day traders who invest their own money in day trading are not required to be licensed.

The Rules of Pattern Day Trading

According to Pattern Day Trader (PDT) rules, if you take 3 or more day trades within a 5-day period, you are considered to be a day trader and are then required to keep a minimum of $2,500 in your account. Many of those involved in day trading who cannot maintain this balance will have to trade at Suretrader/Tradezero or Prop Firm.

Swing Trading

Those who choose to be involved in swing trading hold onto their stocks overnight or over several nights. Yet these are still considered to be very short-term investments.

What is Stock Market Hours

The stock market is open Monday through Friday from 9:30 a.m. to 4 p.m., except for holidays when the market will either close at 1 p.m. or be closed for the entire day. There are such things as pre-market or after-hours trading, but during these hours liquidity is frequently low as there are typically not many buyers or sellers during these hours.

The Bull or Bullish Market

When the market is a “Bull” market, it means the market is strong and trending upwards. Some traders take this position on a stock they are trading in because they are expecting it to increase in value.

The Bear or Bearish Market

A bear market is a weak one in which traders are expecting the value of one or more stocks to decrease in value. Traders may sell off their “Bullish” positions or short-sell their investments.

The IPO or Initial Public Offering

Companies make use of the IPO by selling a set number of stocks on the open market to raise needed capital to invest in research, growth or their own investments.

Float

Once the IPO stocks have been released to the market, the number of available shares remaining on the market are called the float. Keep in mind the Float is the equivalent to a level of supply so the more limited the available supply and the more in demand they are, the faster they tend to move up and down.

The Share Buy Back

Once a company issues an IPO they can buy them back. When this happens, the supply becomes more limited, which in turn increases the value of the stock while at the same time decreasing the float.

The Secondary Offering

If a company chooses to offer more shares after the IPO, this is referred to as a secondary offering no matter how many times they choose to offer more shares. However, when this happens, it increases the Float and at the same time decreases their value.

This is just the tip of the iceberg when it comes the number of day trading terms you will need to master to become a successful day trader. Of course, you don’t have to learn them all at once; you can take your time and master them on your way to learning how to make a living in the world of day trading. We continue this in part two.

Surveys For Fun and Pocket Change

I’ve been promising a list of survey companies I have used and what I think of them, and here it finally is! I’ve broken down the list into ones I’ve been paid by (and what I think of them), ones I like but haven’t earned enough to cash out from, and ones I’ve tried but don’t like and why (you may have a different experience). I am also including two things I have tried that aren’t surveys exactly and I’ll explain them when I get to them. (Note: some of the links provided are affiliate links, there is a * by those). I have been doing surveys online for a little less than a year and I will note how much money I have earned from each site and about how long I have been signed up with them. None of this will make you rich :) .

I do not like surveys where all you get is an entry in a drawing, and therefore I refuse to do them. All of the ones I use pay out in cash or gift certificates to things I actually use (mostly cash though). I will differentiate where appropriate. Many of them that pay cash you also can get free stuff instead. I haven’t mentioned that on the specific ones because… I never get prizes, I always get cash. ;) On to the surveys!

Surveys that have paid me and I like:

  • My Survey*: I get the most surveys here. They also pay in points, 1000 points = $10. You need $10 to cash out. The thing I like the best about this site is that you get 10 points guaranteed just for doing the pre-qualifying surveys. The other thing I like is that they do a lot of product testing. I have tested about 15 products through them – I get something free sent to me and then I get points for filling out the followup survey. I have earned about $80 through them over about a 10 month period.
  • Your2Cents: These surveys generally pay $1-$5 per survey, and when you fill out profiles, you get a $1 bonus added to the next survey you qualify for. You only need $5 to cash out. I don’t get a ton of surveys from them but I get half a dozen invites a month and generally qualify for about half of them. They pay by sending you a check. I have earned about $40 through them over about a 6 month period.
  • Opinion Outpost*: This also has a very low cashout ($5) and surveys pay anywhere from 10-50 “points”. 50 points = $5. I don’t get a lot of invites from them, maybe 1-2 a month, and I don’t always qualify. A nice thing is that you get a point or two just for trying to qualify. They pay by sending you a check. I have earned about $30 through them over about a 6 month period.
  • FGI Research: This pays generally $1 through paypal for every survey you qualify for. I get on average an invite every two weeks and qualify for most of them. I sometimes get very short surveys that only pay in a sweepstakes entry and they claim will qualify you for more surveys in the future. I do these sweepstakes ones if I have time, most of the time I delete them lol. I have earned about $10 over a 3 or so month period.
  • ACOP: This site pays a check for every full survey you complete, generally $4. But you need to do a very short prequalifying survey each time, and I generally don’t end up qualifying. In 6 months I would say I’ve gotten maybe $12. I haven’t kept exact track.
  • Join MyPoints*: This is not a survey site (although sometimes you get surveys). Basically, they send me a whole lot of emails directly from their site (not third parties) which I have filtered to a separate folder in outlook and you get 5 points for just clicking on the link in the email and visiting the site mentioned. It is simple, and generally 1500 points gets you a $10 gift card. In two months I have enough points to get a $10 gift card to Target. Sometimes they send a survey link that you get 10-50 points for. And you can buy things through their portal at other websites and get points back for that (I haven’t done that yet).
  • Lightspeed: This is also points and something like 1250 points cashes out as a $10 paypal payment. The surveys generally pay anywhere from 50 to 300 points. I have cashed out once in three months and am very close to cashing out again. The surveys are generally pretty easy but I often do not qualify. I get several invites a month.
  • TestSpin: This is kind of odd. I get several invites a day from them, but I generally only qualify for one out of every 30 I get. They pay in $10 Amazon gift certificates and I have earned one so far. They take a LONG time to credit your account (think weeks) for surveys completed but I have gotten credit for every one so far. The site claims that they are working on a paypal cashout system but it isn’t there yet.

Ones I like but I haven’t cashed out from:

  • Synovate*: I used to not like this so much because it was a “enter a sweepstakes” reward system, but they switched to a point system. The point numbers are crazy (5,000 to cash out for $5) but surveys generally pay a few hundred each time. They claim they are raising the rewards as we speak too. I have only been doing surveys for a few months but I haven’t gotten to 5,000 points yet so… I am at around 3,500. It isn’t my favorite but I keep it around just in case. It is good to have a lot of options available.
  • DataIntelligence: I just signed up for this a month ago and I’ve only earned 80 points so far (1300 points is a $10 amazon gift card). I got a few invites this past month but I have only qualified for the one so far.

Ones I didn’t like, your experience may vary:

  • Greenfield: Why I don’t like this is the vast majority of invites are for drawing entries. I stay signed up though because once in a while I get one that pays cash. You can cash out after $1 earned and I have earned $10 in about a year (this was the first site I ever tried).
  • Cash Crate*: This is not surveys. This is “Get Paid To” do stuff. If you do this – get a separate email account. I filled out lots of “free” forms for stuff and seriously, I STILL get about 500 spam emails a day. It is possible to earn the $10/month to cash out with just doing free surveys and such (which is what I did) but it was so not worth the hassle to me. I include it though because some people LOVE it. So I thought I would say I’ve tried it, but it wasn’t for me. You also get a % of what your referrals earn, so I can’t help but use my referral link lol. But generally Get Paid To sites aren’t my cup of tea. I got to $11.10 and then never used it again. But I did get my $11.10 in a check as promised.

Anyway, here it is! There are tons more companies out there but I can only do so many surveys or my head explodes. For me, this is the combination that works. I probably forgot a few…. there are a few that only send me a survey once in a blue moon and I forget about them inbetween. You will not get rich, and it does not pay well (like in an hourly sense). But if you don’t have something else to do to earn some bucks, feel free to try a survey.

Comments

  1. Lynnae @ Being Frugal Says:

    October 1st, 2007 at 9:24 am

    Cash crate wasn’t for me either. I can’t take all the email! lol

    I do love MyPoints, and I’ve bought things through their link. In fact, I get my printer ink through 123 Inkjets, which pays over 300 points per purchase, no matter how small your purchase. And they usually have free shipping, too. :) It adds up fast.

    Unfortunately since my husband works in media, I don’t qualify for a lot of surveys.

  2. Shannon Says:

    October 1st, 2007 at 12:51 pm

    MyPoints rocks – I buy probably half my clothes with the Old Navy gift cards. And no, I don’t buy a lot of clothes, but I can make $25 at Old Navy go a long way.

    Also – the link for FGI research points to My Survey – at least for me. I think you wanted this http://www.fgiresearch.com/smartpanel/ (and I hope this isn’t a FireFox thing. But it may be)

  3. paidtwice Says:

    October 1st, 2007 at 1:49 pm

    Thanks for pointing that out Shannon! I thought I had checked all the links last night. I am so technology challenged. it should be correct now :)

  4. SavingDiva Says:

    October 1st, 2007 at 2:00 pm

    Great list!

  5. SingleGuyMoney Says:

    October 1st, 2007 at 8:08 pm

    I also use Mypoints and I am a big fan. I have been using the site for at least 2 yrs and I would say I have redeemed about $200 worth of points.

  6. alison Says:

    October 1st, 2007 at 11:51 pm

    Thanks for the list! I’ll also add a few if you dont mind. Global Test Market which has a minimum payout of $50/1000 points, but you’re always guaranteed 5 points for just trying to qualify and they tend to tell you quickly if you haven’t qualified. I’ve gotten $100 in a little under two years, though I’m averaging enough points now to get my next $50 in a few months. E-poll pays in gift cards, again, another one with relatively quick surveys. Esearch does paypal payments. I don’t get much from them, but seem to qualify each time that I do.
    If you’re into product testing, is a good one. I’ve done one product test for them, was able to keep the product and also got a $20 giftcard. I’m currently doing one where I’ll get a $10 giftcard.

  7. alison Says:

    October 1st, 2007 at 11:53 pm

    The links didn’t work on my last post, they are
    http://www.globaltestmarket.com
    http://www.epoll.com
    http://www.esearch.com
    http://www.inhomeproducttesting.com
    Sorry for my ineptness!

  8. Gaida Says:

    October 2nd, 2007 at 2:55 am

    Thanks for the great list of survey links.

  9. paidtwice Says:

    October 3rd, 2007 at 12:22 pm

    I’ll have to check out the other sites when I have time! thanks!!

  10. Danielle Says:

    October 3rd, 2007 at 2:05 pm

    I’ve made like $25 using Survey Savvy as well.

    oh, and have you done Pinecone research? They are very very consistent, you get btwn 2-5 surveys a month, they pay $5 each and it’s almost instantly credited to your paypal account. It is hard to get in since they only open up for new members a couple of times a year, so keep your eyes open for them. I’d send you a link if I could! Great blog, by the way, I am looking forward to reading more!

  11. paidtwice Says:

    October 3rd, 2007 at 2:14 pm

    I do pinecone but I didn’t include it since I can’t tell people how to join it :)

    I don’t get quite so many surveys a month though, I must be in the wrong demographic. I do get surveys though.

  12. Lisa Says:

    October 31st, 2007 at 1:56 pm

    Thanks for the list – it’s nice to have all the links in one spot. I also don’t like Cash Crate – too much work to keep track of what trials you have to cancel by when.

    Thank you for the My Survey invite – hope you get your points! Also used your affiliate link for Opinion Outpost.

  13. paidtwice Says:

    October 31st, 2007 at 2:27 pm

    Thanks! I just got more points so thanks! And thanks for the opinion outpost one too! I wish they gave out a bonus to both people but they don’t work that way.

  14. amaranta Says:

    March 6th, 2008 at 2:00 pm

    you might want to try myview.com- i get a lot of cash that way (around $6-10 a month) you just have to be fast about answering the surveys because they fill up.

  15. Dividend growth investor Says:

    March 24th, 2008 at 11:12 am

    I use inboxdollars. Haven’t requested a payment yet though ( $30 minimum).

  16. Gale Says:

    March 24th, 2008 at 7:46 pm

    Hi! Very good post! Your experience mirrors mine–especially testspin…they do send a lot but I rarely qualify for any of them. OH, and Greenfield too…I totally agree. Too much surveys for sweepstakes…and they’re LONG surveys too. Who wants to spend 20 minutes for a sweepstakes entry!

    I have a survey site too, and though we have a lot of overlap there’s a few that you might be interested in. Hope you’ll stop by.

  17. Jonathan Says:

    April 6th, 2008 at 11:07 am

    I love writing on this subject, there are a number of good survey sites out there and there also some to be careful of. Personally I like Global Opinion panels. I find that Your2cents is a bit hit and miss.

  18. Online Dividends Says:

    June 27th, 2008 at 9:44 pm

    I am using Inbox Dollars. It did take me 3-4 months to earn the $30 minimum to get a check though. The think that I don’t like is that they “charge” 3 dollars to process you payment. So if you want, you could simply wait for your check to get bigger before you request it. I just didn’t know if I am going to get any money at all or not. So i requested it, and it arrived 1 month after that.

  19. Conor O’Driscoll Says:

    June 28th, 2008 at 5:36 am

    Great list, thanks for posting this.

  20. fitwallet Says:

    July 6th, 2008 at 12:29 pm

    The thing that makes me nervous is that when I click on a survey to take (from say, MySurvey.com), the website with the actual survey on it asks me for my mailing address. I don’t care about getting spammed, but I HATE junk mail and don’t want to get on a million mailing lists! Does the volume of junkmail increase a lot when you participate in these things?

  21. paidtwice Says:

    July 6th, 2008 at 12:45 pm

    I already get tons of junkmail (I have since way before I started taking surveys) so I honestly don’t know. However, for My Survey for example, all they use my mailing address for is to send me checks.

    The only actual surveys that have asked me for my mailing address have been to send me product samples to test.

  22. Free Paid Surveys Says:

    July 29th, 2008 at 6:27 pm

    Opinion Outpost is one of my favorite survey companies. I have made the most money with them thus far. If you are planning on taking paid surveys, make sure to sign up for another email address through gmail or hotmail or something.

  23. linda Says:

    September 22nd, 2008 at 12:38 pm

    I’ve never done online surveys I don’t know have to start

  24. linda Says:

    September 22nd, 2008 at 12:40 pm

    My daughter has done these but she hasn’t showed me how to do it

  25. paidtwice Says:

    September 22nd, 2008 at 1:06 pm

    You just click on a link and sign up :) The survey peeps send instructions when you get a survey.

  26. Samedaycash Says:

    October 3rd, 2008 at 8:02 pm

    I only do paid surveys for cash now. I used to do some for raffles or contest but they are not worth the time. One site that was great is pine cone but you have to get invite. They used to pay real good now they paid just good after they lowered amount they pay per survey.

  27. Mama Koala Says:

    February 19th, 2009 at 2:27 pm

    Thanks for this info. I work full time, but am anxious to find additional ways to save and pay off debt. I don’t want to take a 2nd job outside the home, as we have a one year old and are expecting another. I think I’ll start checking into these opportunities.

  28. ashleyD Says:

    February 19th, 2009 at 3:30 pm

    do you have any feelings towards PineCone? i signed up from another frugral bloggers word it is good.

  29. ashleyD Says:

    February 19th, 2009 at 3:59 pm

    nevermind! haha! just saw your post in the comments! thanks!

  30. LoisAlene Says:

    August 10th, 2009 at 12:25 pm

    I’ve been a member of MyPoints for over 10 years. You can (and I have) purchase things through their site for points but the easiest way to get points is just to opt in for the bonus mail. I average around a $50 redemption every 6 months just from clicking on the bonus mail links.

Developing a Snowflaking Mentality

Welcome to Get Rich Slowly readers who have found my site through JD’s great post about snowflaking today! Putting the art of snowflaking into practice in my own life has really turned my entire financial picture around, and I can’t say enough good things about it. I have a long way to go until I am in a place of true financial health, but I have made more progress than I could have originally imagined in the past year, in large part due to the power of the snowflake.

Snowflaking is a concept that is easy to understand, simple to do, and its effect is magnified over time.

At first glance, it may seem oversimplistic and not very effective, for what difference does a few dollars here or there make if you are thousands or tens of thousands (or more) dollars in debt? The change doesn’t happen overnight, but repeated small savings and payments do add up much faster than one might think. In seven months of dedicated snowflaking, I have reduced my overall debt total by almost $10,000 and over $4000 of that was from snowflaking. I challenged myself every day, week, and month to earn a little more, save a little more, and pay down my debt a little more, and it has worked.

Snowflaking isn’t just for people in debt!

This concept of putting small amounts of money to work for you over and over again can be applied just as easily to a savings plan as a debt payoff plan. In fact, that is exactly what I intend to do once I am out of debt. I am hooked on snowflaking for the long term.

I’ve been using the power of snowflaking small amounts to debt for almost a year now, and the results really have been astounding for me. Throughout this process, there have been a few key subtle yet powerful changes in how I look at money management, and how I practice good financial principles in my own life. Here are some tips I’ve uncovered to develop the snowflaking mentality in all of us.

1. The small stuff matters.

This might be the most important habit to develop. Small stuff matters. I used to not bother to print my gasoline receipts at the pump, because I felt like I had to get gas anyway, so who cares how much I spent? This carried over to a lot of other areas of my life – anything that I just accepted as an inevitable expense I didn’t keep track of the details of. This led to me never exactly knowing how much less I spent than I earned, and therefore I had to keep a considerable cushion in my checking account just in case. No more. By keeping track of the details, I can find small savings to snowflake to my debt and not have to sacrifice those savings to “just in case”.

2. React immediately.

Learning to make immediate payments to debt or transfers to my savings account has also been key to developing the habit of snowflaking in my life. When I earn extra money through making a craigslist sale or getting paid for an online survey – I immediately log into my accounts and send that money as a payment to debt. If I can’t do that because of payment restrictions on an account, I instead immediately move it to my emergency savings account where I can keep track of it until payment time arrives. It is much too easy to just lose those small amounts in the shuffle. React immediately – preserve your small victories.

3. Find joy in the little things.

Honestly, snowflaking is fun! JD mentions in his post that it can seem a little obsessive, and that it is like a game, and both are true. But a little obsession with improving your financial health isn’t a bad thing – there are much worse habits to have. And making snowflaking a game in your mind to see where you can find snowflakes and where you might be able to stretch your dollar to save a dollar somewhere else can truly be fun if you learn to find joy in small accomplishments. Discovering snowflakes is an accomplishment, and big or small, celebrate it (in free ways of course!).

4. Challenge yourself to do even better.

Set goals for yourself, but don’t be satisfied to just meet a static goal week after week or month after month. Keep looking for little places to earn a little more or save a little more, and make those snowflakes grow. In my original snowflake primer I talked about averaging $200 a month in snowflakes. Since then, I have grown the average amount I snowflake to more than double that per month, mostly through exploring new avenues of earning money and finding ways to cut some of my variable expenses even further.

5. Look at the small picture, but reinforce with the big picture.

Snowflakes are great – but they are generally small taken individually. Just as a few snowflakes falling out of the sky don’t seem to make a difference on the ground, it may not seem that the small financial victories are making a big difference in the overall picture. So let those snowflakes collect into a great big snowdrift by tracking them. Once a week, once a month, or once every few months, whenever you need motivation to continue, add up how much you have been able to snowflake and the difference that has made in your debt or savings totals. You may be surprised how much of a difference it makes.

Just like any habit, snowflaking as an automatic reaction takes time. But the time spent reinforcing the ideals of paying down your debt or increasing your savings is, in my view, time very well spent. Join the snowflake revolution and watch your debt decrease or savings increase!

Comments

  1. Kelly Says:

    January 24th, 2008 at 1:16 pm

    Thank you so much for this article. I’ve already plegged to start making those little sums of money work for me, and towards my goal, instead of just having them disappear into the void. This has givin me even more motivation. They’re all great tips, but I think I needed to hear number two the most.

  2. I find it hard to snowflake honestly. I honestly think about getting out of debt, is looking at the big picture. Do you owe too much on the house and car and is that causing you to use CC to live a lifestyle you could afford if you didn’t buy too much house or too much car?

    And living on a budget, suddenly you know where your money is going and telling it where to do. Does that free up a lot of cash?

    I realize some people are struggling to make ends meet, but if you have a $300/car payment, maybe that needs to be the first to go. Then concentrate on the snowflakes.

  3. paidtwice Says:

    January 24th, 2008 at 2:55 pm

    @LivingAlmostLarge – Debt is about a lot of things, and different for different people. For some people it is the big things that need to change. Living within your means, and reasonably so, is very important. But for some people, the “little things” really honestly and truly do add up. I don’t claim to not need to change big things, or that this could go faster changing big things. But for us and our situation, small things have *really* mattered. We spent a lot of random money on small things that seemed insignificant at the time.

    Yes, it would be awesome to not have a car payment or have a house payment that is $300 less. Then I could snowflake that money ;) . And a big part of our goal has been to increase my income to create snowflakes as well as cut expenses wherever we can manage to, also creating snowflakes.

    Since I finally use my undergraduate degree for something I ought to start calling that good debt lol. But that’s a tangent.

  4. Darrell Says:

    January 24th, 2008 at 3:42 pm

    Very well written article! We have been using these same methods for less than a month and have managed to already pay off an IRS tax bill (very old one) and are poised to destroy a personal loan 14 months early. It definitely works and works very well.

  5. Aaron Says:

    January 24th, 2008 at 4:26 pm

    Great article & site. I stumbled over from GetRichSlowly. I’ve been doing some reading lately and starting to put together our plan for dumping debt (about 34k non-mortgage stuff) and am curious about snowflaking. The only thing I’m not certain about is the CC payments. Is it OK if I make multiple payments each month (4 * $50) instead of a single lump payment (1 * $200)? It seems like that would help me take small nibbles (snowflakes) but I’m not sure if it would incur the wrath of the bank.

    Or, should all my snowflake payments go in after my normal monthly payment. Seems like a really elementary question, but I’m having trouble wrapping my brain around it.

  6. paidtwice Says:

    January 24th, 2008 at 4:41 pm

    Hi Aaron!

    Honestly, it depends on your bank/CC. You’ll have to investigate what their payment policy is. I’ve had one that I could make as many payments as I wanted (CapitalOne) and one that I am limited to 4 payments per billing cycle (Citi).

    As for the $50×4 vs $200 at once – it should be fine as long as your entire minimum payment arrives before the due date.

    I pay snowflakes generally after I make my monthly minimum, but you can do it in whatever order depending on what your CC policy is.

    Hope that helps!

  7. Jagular Says:

    January 24th, 2008 at 10:47 pm

    Hello. I found your blog from the link at wereindebt.com
    I like the way that you write and the tips that you give, and I just wanted to let you know that I am looking forward to reading your blog in the future. I’ve bookmarked you and added you to my blogroll over at http://www.riverofdebt.com
    Thanks for all of your effort. A lot of the stuff that you have written is very helpful to me as I am just starting off on my road to get out of debt.

  8. Wayne Says:

    January 25th, 2008 at 1:07 pm

    Hi,
    I was wondering where you take surveys and get paid for it? I always thoght those things were scams. I would appreciate any information on where and how to do so.

    Thanx,
    Wayne

  9. paidtwice Says:

    January 25th, 2008 at 3:55 pm

    @Wayne – I have a post over in my sidebar called “Surveys for fun and pocket change” and it details the companies I use and why. Hope that helps!!

  10. Livingalmostlarge Says:

    January 27th, 2008 at 12:26 am

    No totally, but sometimes there is no way out of debt other than to dump the house or the car. If the house is 50%+ of your income there might not be much left to pay off other debt and stop accruing debt.

    Or I know lots of people with $500-600/month for just 1 car payment.

    I’ve had a car payment for $150/month, 3 years. Starter debt. But seriously, snowflaking won’t matter when you are losing $1k/month.

  11. Kim Says:

    December 27th, 2008 at 11:31 am

    I don’t know how I missed this post the first time around (found the link on http://www.GreenPandaTreehouse.com.) Just wanted to let you know how much I like this concept. It is simple and so easy to visualize. Almost makes saving money a zen-like experience. Thanks!

  12. Steve in W MA Says:

    March 31st, 2010 at 4:10 am

    @ “I’ve had one (credit card account) that I could make as many payments as I wanted (CapitalOne) and one that I am limited to 4 payments per billing cycle (Citi).”

    Strictly speaking, this is most likely a cap on electronic payments that you have them initiate through their own website. It’s very unlikely (and probably illegal) for a credit card company to put a cap on how many times you pay them electronically if you originate the payment from your own checking account.

  13. Trisha Donaldson Says:

    June 21st, 2011 at 10:04 am

    THANK YOU! The devil is always in the details and your article has helped me to really be motivated on my debt free project. Just to give you a 50K overview..I am 66 and we purchased a house about 3 years ago and moved to the mountains – along way out in the country. The company I worked for (from home) went bankrupt and I got behind on my mortgage..so I went for a modification. The payment did come down but they put us on a FORTY YEAR mortgage. I would be 106 when it is paid off…but with a good debt reduction plan…it will be paid off in less than 10 years…or sooner with snowflakes!!!

Snowflaking – a primer – What is it?

I have had several questions lately about snowflaking – what is it, why do I do it, can we see examples of it – so I thought I would write a quick primer answering those questions and more.

Snowflaking is a spinoff of the Snowball approach to debt reduction popularized by Dave Ramsey. With the Debt Snowball method, you figure out what amount you can pay to debt every month, and then you keep paying that amount, even as your debts shrink and your minimums get smaller. To implement it, in a nutshell, make a list of all your debts, order them from either smallest to largest or highest interest to lowest interest (that is a debate in itself), and you focus all extra money above the minimum payments on a single debt (either the smallest total or the highest interest, I use interest order). As you eliminate debts, you apply the payment you were making to that debt to the next debt in line until the snowballing effect of decreasing minimums and increasing amounts applied to particular debts eliminates all the debts on your list.

Well, what are snowballs made of? Snowflakes!

I have a set amount I pay to debt without fail every month that is above my minimum payment due (about $800). On top of that, I also try to collect up little bits of money wherever I can and I apply those as well to my top priority debt as immediately as possible. I take surveys online, I sell possessions on craigslist and ebay, I have yard sales, and any money I get from these endeavors goes directly to my debt. I also keep a very strict accounting of all the money that comes in every month and what I spend and everything left over at the end of the month not earmarked for future expenses also goes directly to debt. These are my snowflakes. I have averaged over $200 extra going to pay down my credit card debt every month due to these snowflaking efforts.

Many small snowflakes make a snowball, and no amount is too small for me to snowflake.

I used to pay my credit card directly every time I collected a snowflake through their online interface, but now that I have moved my credit card debt to another card with a 0% interest offer, I collect the snowflakes and pay them once per week (I am limited to the number of payments I can make to this card a month). If you are able to and your debt is not at 0% interest, I highly recommend the pay snowflakes immediately” method. The faster your balance is reduced, the less interest you will accrue.

So, that is my snowflaking method. Small efforts matter, and many little things can add up to a huge snowstorm.  I use it because of anything I’ve tried, this has kept me the most focused and deliberate about debt reduction and eliminated debt the fastest. I cannot take credit for the idea or the implementation, many many other personal finance gurus and bloggers alike have used this method before me, and I first read about it on an iVillage Debt Support message board. I am just a subscriber to it. Maybe someday I should read some Dave Ramsey and learn from the granddaddy of the snowball himself.

Comments:

  1. Mrs. Micah Says:

    October 12th, 2007 at 7:23 am

    Dave’s pretty good for those getting started, but you’re already doing so well I don’t know if he’d have much more for you. There might be something in there you hadn’t read or thought of, though, so don’t let me stop you. :-)

  2. FinanceAndFat Says:

    October 12th, 2007 at 9:56 am

    You may want to try the Dave Ramsey podcast. It is free, only about 40 minutes a day, and you’ll get all of the info from his books, plus people’s personal stories. His Friday shows are extra inspiring because he opens the lines for people who have just paid off their last debts to call in and yell ‘I’m debt free!’. It makes me so jealous, but in a good way. :)

  3. SavingDiva Says:

    October 12th, 2007 at 10:39 am

    I think your method is working for you, so you don’t need to listen to any guru.

  4. Pinyo Says:

    October 12th, 2007 at 2:09 pm

    Thanks for explaining. I was beginning to wonder what the heck you are talking about :-)

    Good work with knocking off your debt.

    @FinancAndFat – thanks for pointing out the podcast, I’ll check it out.

  5. plonkee Says:

    October 12th, 2007 at 5:23 pm

    You can do it all by yourself. I love the snowflake idea – I sort of guessed what you’d been talking about but I’m glad you’ve explained it properly.

  6. paidtwice Says:

    October 15th, 2007 at 3:51 pm

    You know, I never realized snowflaking was so mysterious :) . Sometimes it is the simple things I should be talking about!

    Thanks :)

  7. Jennifer Says:

    October 15th, 2007 at 9:15 pm

    I have been doing the same thing – but never heard it referred to as snowflaking. Cute! And you are so right, those extra small payments really make a difference. And I soooo love on line bill pay because it makes it soo convenient to send in an extra payment anytime you earn a little extra money. :)

    I added a link to your site on my blog. :)

  8. Tracie Says:

    October 18th, 2007 at 10:45 am

    I LOVE the concept of snowflaking. Once the idea is planted in your head to mow down the debt, it’s psychologically hard to wait until paydays to make any further progress. Snowflaking allows us to be creative during the rest of the week and make little dents in the debt while planning our big attack for paydays! I’ve done the eBay/survey thing too, but without any plan, those little bits just get sucked into daily expenses. Not anymore! I’m a flaker now! Thanks for the concept and the motivation!

  9. paidtwice Says:

    October 22nd, 2007 at 3:33 pm

    @Jennifer – yay for snowflaking! thanks for the link :)

    @Tracie – the little bits get easily lost, but they can really make a difference. I love snowflaking the little bits (and the big bits too of course)

  10. pat Says:

    December 18th, 2007 at 3:41 am

    I love the snowflake idea! And the “snowball” debt repayment plan originated with Amy Dacyczyn, author of “The Tightwad Gazette,” not Dave Ramsey.

  11. Heather Says:

    March 1st, 2008 at 8:29 pm

    Thank you for your post on snocwflaking. I am new reader to your blog, and have gleaned so much knowledge from your entries. I am making my first fluorried attempts to snowflaking away one of my credit cards. Thank You for your advice.

  12. Wess Stewart Says:

    March 3rd, 2008 at 11:11 pm

    I think I would be wary of a company that said I could only pay off a debt (while being charged interest) with a set number of payments.

    It’s my debt, I’ll pay it off as fast as I can.

    I just had a friend that was asked (as he payed off a school loan) ‘Why are you paying off the balance rather than paying it out?’ His response – ‘Is there any reason that I shouldn’t?’

    That was followed by a stunned silence.

  13. Mike Hardin Says:

    March 19th, 2008 at 10:13 am

    If you have your credit card at 0% for a few months, why not put those snowflakes in a high interest online savings account, and just pay the minimum payment on the credit card until the end of the 0% offer. Then when the 0% offer expires, you can move the money from the savings account, and the interest you earned will be extra snowflakes!

    That’s what I’m doing. I moved all my credit card debt (about $7,000) to a 0% credit card almost a year ago. The 0% offer expires June 1. By then I expect to have put enough money in my HSBC direct online savings account earning better than 3% to pay off the card and have a little left over. In the mean time, I’ve just been making minimum payments on the card. The balance on the card is down to $5,800.

  14. Frugal Dad Says:

    March 19th, 2008 at 11:17 am

    I love the concept of “snowflaking” and first read about it on the My Total Money Makeover forums (probably based on this post). I set up a second checking account to collect the snowflakes and write one check at the end of the month to clear that account and pay down a little debt.

  15. paidtwice Says:

    March 19th, 2008 at 11:51 am

    @ Mike – I agree, what you are illustrating does make great sense. For me, the credit card was also an emotional debt that I honestly needed to purge and be done with. So I thought about doing something similar but eventually opted for just paying it off.

    @Frugal Dad – I’m not a member of TMMO forums but I was told by Ana that they had picked up on this post and posted about it there, so indeed, you did kind of find out about it from my site, in a roundabout way. Thanks for commenting!

  16. Paula Hewitt Says:

    March 23rd, 2008 at 5:11 pm

    This is a great idea – thanks for sharing it

  17. Debt Free Earth Says:

    April 5th, 2008 at 7:22 am

    Frugal Dad has the right idea. Unless you “seize the savings”, often times that money we save on gas, not doing Starbucks and brown-bagging it disappears into other areas. I actually teach a class in local community centers and schools based on the concept of snowflaking as well as another on debt elimination. We teach to calculate the approximate savings for a given month (reverse budgeting) and get that amount direct deposited into that separate account in advance from the employer, if possible. And like Frugal Dad, we use this extra amount to that debt we are focusing on paying off first. This only focuses on half of the “snowflakes”, the ebay selling and other found money is extra money to be deposited.

    Reading this blog (and other PF blogs) has been great for getting different points of view that aren’t in the textbooks I use. Thanks Paid Twice!

  18. Hywelda9 Says:

    April 6th, 2008 at 11:50 pm

    I agree wholeheartedly with this post and with this message. Lo many years ago, I needed to begin to get myself our of a near-poverty situation. The “snowflake” method was the only one I had available. Once debt and other problems were out of the way, I could begin to save, and then to invest. I am now able to enjoy early retirement with a great-sized investment portfolio, and when I tell you it was all begun with $25 a week, I am not kidding.

  19. Teri Balch Says:

    April 8th, 2008 at 10:42 am

    I love this idea and it seems like it’s working great for you!

  20. Movingonup Says:

    April 8th, 2008 at 10:54 am

    Snowflaking Kicks Butt!

  21. Mike Says:

    April 18th, 2008 at 11:27 am

    The beauty of this idea is that you can start really small – how small is a snowflake? and you can build from there. As with almost everything in life but especially debt it is the little things that count. Build the momentum slowly – flake by flake

  22. jack rowsey Says:

    June 17th, 2008 at 1:04 pm

    Thank’s for the post.
    You give quite a clear description on snowflaking.
    but still it takes a good deal of commitment.

    without proper discipline, a good debt elimination method would be useless.

  23. My Journey From Debt Says:

    July 11th, 2008 at 5:15 am

    Tonight is the first time that I have heard of this, I’ve heard of the whole snowball thing before, but almost like this better. I’m not sure how good I will be at implementing it though because any “snowflakes” I can think of lately have “melted” before I got them home (so to speak)

  24. Cathy | Mommy Motivation Says:

    December 12th, 2008 at 12:37 am

    I saw your button on another blog, and in maybe 2 clicks, got right here! Well done! :)

    I didn’t know of this before – thanks for posting it.

    BTW, I love this theme too – I’ve edited it to look like recipe cards for my food blog. It’s very cool… :)

  25. Kick Debt’s Butt Says:

    January 16th, 2009 at 9:50 am

    Hey, budget girl sent me here for your primer on snowflaking – I love the idea and the connection with snowballing the debt away. I’m going to see if I can turn this in to a game for the family!

  26. Are you the originator of this term/concept? Because I just gave you credit as being so!:) At the very least, your blog has given the concept a huge audience…

    http://budgetsarethenewblack.blogspot.com/2009/11/snowball-status.html

  27. John D Says:

    April 8th, 2010 at 5:13 pm

    Super post and explanation and idea. I just did a little snowflake to Target. $20 doesn’t seem much compared to a 570 balance, but it made me feel good to get that extra in. Now I feel a snowstorm coming on! I am going to live each day wondering where I can get another snowflake to put in, and I feel I will see opportunities I didn’t see before. It’s inspiring me to go back to secret shopping too, and snowflake every payment I get.

    BTW, Dave Ramsey never claims to have created any of his baby steps or other advice. He gives credit to others. What you will find is that he has packaged the best advice into a system that gives us the greatest chance at being successful in eliminating debt despite unexpected emergencies along the way, and also helps us build a life on the other side, once the debt’s gone. His great contribution is in the order of the steps.

    Good luck to all!

September Wrapup – How did we do?

So the end of September is upon us, and it is time for a look at how another month went with our budget, and if we have anything left to make an extra snowflake to the credit card.

  • Our total income was $4027.37 (that includes the $430.35 carryover from last month)
  • We spent $3764.27 (that includes the $152.08 snowflake from last month’s surplus)

So another month of spending less than we earned! :insert happy dance here: That may seem elementary but I’m pretty darn excited about it. The difference is $263.10, and $180.30 of that is earmarked for irregular expenses and thus gets added to next month’s budget. That means we have an $82.80 snowflake left comprised of this month’s true surplus. It may not be as big as in some previous months but it is still exciting. We had an extra week of grocery expenses this month and an average month of earnings from my contracting work, so having a surplus to me is just great. I’ll be snowflaking that along with my “standard” $200 payment when my spouse gets his first October paycheck on the 5th. Oh and after all the”excitement” of my budget and bank account not agreeing at the end of last month, they agree exactly this month. Hopefully they will continue to agree going forward now that I am carrying over the difference between spent and earned from each month into the next month on paper.

As far as debt repayment was concerned, we paid:

  • $452.08 total to credit cards ($343.08 over the minimum repayment)
  • $1062.49 total to debt (all others than credit cards were paid the minimum)

And I took in $92.15 in alternative income which all went to the above snowflaking total (craigslist and ebay sales and survey payments). That was a little short of my $100 goal but close. The rest of the snowflaking number is from last month’s surplus which I carry over and then pay when my spouse gets his first monthly paycheck. I am happy we paid over $1050 in debt repayment because that number is my monthly goal. I have a few survey checks still outstanding that should come in in October and knock it down a little further. I fell short of my goal of getting the credit card debt number under $5000 but it is pretty close (it stands at $5049.61 as of right now) and after October 5th I will see a “4″ at the beginning of that number instead of a “5″. :cheer:

The two categories we went significantly over budget in this month were groceries and diapers. I addressed groceries previously, it just wasn’t a realistic number to shoot for. We don’t buy a lot of extras, we’re not eating fancy meals, and we still were coming up short. I am readjusting the grocery budget in months forward to reflect that. I trimmed a little bit from the “clothing” and “gifts” budgets to help offset that, not enough, but it should help. The diaper budget went over because Babies R Us had a big sale so I stocked up on some diapers. I expect to make up for that this month. And hopefully by the end of the month we’ll have our son potty trained and then that category will be able to be significantly reduced. I hope. I can dream.

Some categories we did pretty well sticking to the budget in were gasoline and utilities (natural gas, electricity, water). All of these came out under budget by a small amount. If you look at our budget as a whole, we went over budget this month (but still spent less than we earned), but part of that is that a big irregular expense, my son’s preschool tuition, was due this month. That makes the budget look like on paper that we went over, but in fact we had been saving up every month for this expense and had all the money saved to pay it. It just all happening this month threw the irregular expenses out of whack on paper. We did still go over our projected overall budget, but by closer to $100 instead of $300.

Looking ahead to next month, there are some challenges on the horizon. We have a large annual expense (~$185) for the furnace, a/c and water heater maintenance contract and we don’t have enough saved in the annual expenses fund to cover it yet. We have about $80 saved right now so the other $100 is going to have to come out of future months’ budget for that expense, even though I am paying it right now. Some of the pitfalls of not starting a budget until the middle of the year. By next year that should all sort out and we should have plenty saved in our annual expenses fund to cover our annual expenses by then. The fall is a big time for annual expenses, but once we get past this, we don’t have another significant one coming up until April. The amount I budgeted is correct over a year’s time span, the distribution just leaves something to be desired.

Another challenge next month is that my contracting work is lower than normal. I won’t get a statement and my check until the 15th with the exact amount, but my calculations put the number between $260 and $270. Our budget “expects” me to make $400/month from contracting work. So, well… that’ll be interesting. I am hopeful it will work out, because we should have much lower expenses in the diaper, grocery, and gasoline categories this month (we are working hard at potty training the three year old, and we also stocked up on diapers in a September sale, and with our upcoming trip we won’t be home for a week to eat groceries or use gasoline) so… we’ll see. I’m not expecting a surplus, that’s for sure.

The trip we are taking also concerns me. Not the cost of the trip itself – because it is for my spouse’s work, his employer is paying for the hotel, the transportation for my spouse, and the meals (they are provided by the conference). But for all of us to accompany him, we chose to drive (his employer would pay for his plane ticket but not ours of course, and the cost of two extra plane tickets would have made it impossible for us to come). My spouse will be fully reimbursed for the mileage but we’ll have to pay for the gas up front. I don’t know if we’ll be reimbursed in time to save October’s budget. It is about a 600 mile trip each way, plus any driving I do in the city with the kids. Once we get the reimbursement it will actually save us money in October to go on the trip (free gas and food for a week after all) but until then… well, it won’t be pretty.

So in short, I may have to use some of the emergency fund to fill the gap between payment and reimbursement. I sincerely hope not, but we’ll see how things shake out.

Here’s to spending less than we earn in October!

Comments

  1. Kris Says:

    September 30th, 2007 at 5:55 pm

    Way to go, PT. You’re doing so well. Keep up the good work!

  2. Lynnae @ Being Frugal Says:

    September 30th, 2007 at 7:53 pm

    That’s awesome!!! I need to run my numbers this week, and I don’t think they’re going to look quite as good. I know we don’t have any new debt though, so that’s good, right?

  3. PaulaB52 Says:

    October 1st, 2007 at 11:02 am

    Good job coming in under budget!

  4. SavingDiva Says:

    October 1st, 2007 at 2:10 pm

    Congratulations on spending less than you earn. That is such a big deal! I don’t think people realize…

  5. paidtwice Says:

    October 3rd, 2007 at 11:50 am

    Thanks!!!

    And no new debt is great Lynnae!!

A Practical Illustration of the Power of Snowflaking

Snowflaking, the practice of using small (or large) “extra” amounts of money and using those to pay down debt or increase savings/investing, is the idea of small things make a big difference in action. These small amounts can come from anywhere – earning more temporarily through another job, making things, or selling things, becoming more frugal and saving money in one or more budget categories that you previously would spend, or any other ideas you have for generating extra income or money in your budget that can be earmarked to achieve your goals. The idea that these small things can make a difference over time is sometimes questioned, so I created this example to look at what consistent changes can do over time.

Our example debt is going to be $5000, with a $200 minimum paid per month. This is the minimum that is always paid – think of it as a car loan or student loan – something where the minimum doesn’t change as the debt shrink. Although you can certainly create your own fixed minimum with a credit card, and in fact, that was one of the small steps I took that eventually got me out of credit card debt completely. In our example, we are going to look at the effect of paying simply $1 extra per week, $10 extra per week, and $20 extra per week for three different interest rates – 5%, 10%, and 20%. It might be surprising that even just $1 per week extra will end up in some cases making a noticeable difference. The data was calculated using the snowball calculator.

First, a $5000 debt with a $200 minimum payment per month at 5% interest:

  • Paying simply the minimum: Paid off in 27 months, paid $268 in interest charges.
  • Paying $204/month ($1 extra per week) : Paid off in 26 months, paid $262 in interest.
  • Paying $240/month ($10/week extra) : Paid off in 22 months, $222 in interest.
  • Paying $280/month ($20/week extra) : Paid off in 19 months, $185 in interest.

In this example, just that $1 extra per week causes the payoff date to come a month earlier than without it. Of course, the difference is more noticeable the more extra you pay, but even just that $1 per week will save you a few dollars in interest in the long run.

Now the $5000 debt with $200 minimum/month at 10% interest:

  • Paying simply the minimum: Paid off in 28 months, paid $578 in interest charges.
  • Paying $204/month ($1 extra per week) : Paid off in 28 months, paid $567 in interest.
  • Paying $240/month ($10/week extra) : Paid off in 23 months, $466 in interest.
  • Paying $280/month ($20/week extra) : Paid off in 20 months, $391 in interest.

Here, just paying $20 extra per week ends up with a payoff date 8 months earlier and almost $200 less in interest charges paid. Even paying just $10 per week extra will save you over $100 in interest in the long run.

And finally that same $5000 debt with $200 minimum per month at 20% interest:

  • Paying simply the minimum: Paid off in 32 months, paid $1382 in interest charges.
  • Paying $204/month ($1 extra per week) : Paid off in 32 months, paid $1343 in interest.
  • Paying $240/month ($10/week extra) : Paid off in 26 months, $1071 in interest.
  • Paying $280/month ($20/week extra) : Paid off in 21 months, $868 in interest.

Paying $20 extra per week, you pay off the debt almost a year earlier, and save almost $500 in interest! Even just $1 extra per week will save you almost $40 in interest charges.

So you can see that snowflakes, even small ones, can make a difference in how much interest you pay over the life of a debt. The bigger the snowflakes, the more effect they can have, but even the smallest snowflakes can speed up your debt reduction and reduce the total you have to pay.

Comments

  1. frugalwannabe Says:

    March 26th, 2008 at 10:47 am

    Great illustration! I’ve been trying to get this through to my hubby but he hasn’t quite gotten it yet. I’ll be sending this post to him today!

  2. Jeff Says:

    March 26th, 2008 at 11:21 am

    I’ve only recently discovered snowflaking. It was one of those “duh” moments when I couldn’t help but wonder why I hadn’t thought of it before. I’m sharing the snowflake idea with others and if they understand the snowball plan, they eventually come around to snowflaking. Snowflake on!

  3. Ron@TheWisdomJournal Says:

    March 26th, 2008 at 12:06 pm

    Wow. This is practical advice you can use! Great job putting this together.

  4. I’m curious again…what kinds of things did you spend your money on to get you into credit card debt? Was it ordinary household expenses or non essential items?

  5. paidtwice Says:

    March 27th, 2008 at 10:06 am

    @Jinger – a mixture of things. Some non-essentials. The vast majority was from our wedding and from my spouse’s subsequent unemployment which not only derailed our plans to pay off the wedding charges but also caused charges of its own while he was unemployed since we had no emergency fund.

  6. jinger Says:

    March 27th, 2008 at 1:29 pm

    Thanks…unemployment, illness and major life events can certainly complicate life plans. Right now an ER visit has derailed my plans and I am afraid, the credit card will be coming out once again if my emergency fund won’t cover the deductible.

    Life, you only have one and gotta live it!

Baby Step 2: Pay Off Debt Using the Debt Snowball

The M-Network is currently doing a series highlighting Dave Ramsey’s 7 Baby Steps for getting out of debt and getting for you life on the right track financially. You can read about all of the steps over on Cash Money Life who kicked things off with a great introduction. As other members of the network add their articles, I’ll add them to the end of this article.

Once you have decided to commit to not adding debt to your life, and have saved a $1000 emergency fund, Dave Ramsey’s next step is to pay off all non-mortgage debt using the debt snowball. The concept is pretty simple. List all your debt (except the house), in order from smallest balance to largest. Figure out how much money you can pay to debt each month (as much as you possibly can) – this is your debt snowball, and must be at least all the minimums on your debts, preferably much more. Then pay the minimum to all the debts but the one with the lowest balance, that one, pay the entire remainder of your debt snowball. Repeat, and repeat, and repeat, and repeat. Once that debt is eliminated – do not reduce the debt snowball! This is key. Move the debt snowball onto the next smallest debt. Repeat until all your debts are gone.

The idea is simple and powerful. It has helped many many people who were stuck in debt and felt there was no way out to find their way. The idea has also come under fire for one main reason – paying the debts smallest to largest costs you more money (in interest) than paying down debts highest interest rate to smallest. Ramsey argues that this is about behavior modification, not about saving a few dollars, and if math was the only issue we wouldn’t be in debt in the first place. The psychological boost from eliminating those smaller debts are the motivation you need to commit to eliminating the larger ones.

I can see both sides of that argument, and honestly, I think it comes down to what motivates you. For me – what I needed was a clear idea that I could make progress on my debt if I committed to paying it down with intensity, but I got that motivation from watching the balance of the highest interest rate one shrink. It honestly would have been unmotivating to me to start with the smallest balance debt and work up to the largest, because my interest rates were so different between them and I have been accused before of being a bit of a numbers geek. It would have just irked me. I know this for a fact, because now that the credit card is paid off, my car loan is the smallest debt (with the smallest interest rate) and my spouse has suggested several times we just take care of that next instead of the student loans, and I get my hackles raised at the very idea. However – I didn’t have any tiny little debts of a few hundred dollars or less. When I started, my smallest debt was still about $6000, so even starting with that, it would have taken a while to pay it off anyway so the psychological boost would have been long in coming. For me, it was enough to keep track of my credit card balance shrinking day by day to get that boost I needed. If I had had some tiny debts, I might have wanted to just get rid of those first, so I can see how that would be satisfying.

So, as you’ve figured out, my debt snowball is used to target my debts from highest interest rate to smallest. I figured out that I could budget $810.41 month after month to debt reduction – which was minimum payments on my student loans and car loan, and $200 to my credit card. Now that the credit card is paid off, that $200 is moved onto the highest interest rate student loan, added to the minimum I was already paying, and used to pay down that debt faster than before. I don’t stop there, however (and Ramsey doesn’t feel you should stop their either – you should throw everything you have at the debt you are targeting). I practice what I call snowflaking – which basically is finding more money every month through frugal living and increasing income, and throwing that at debt as well. If we get a windfall, it goes to debt reduction. If I sell something, the profit goes to debt reduction. It is a motivational spinoff of the Ramsey principle of prioritizing debt reduction to get it done. There are a lot of other bloggers using snowflaking for debt reduction (or for other ways to improve their financial health) at the Snowflake Revolution.

All in all, in my life, I’ve found the debt snowball idea a very useful one, and have adapted it to fit my own motivational needs. We all need to understand ourselves and what motivates us to be successful, and use that to our advantage. Make sure to visit Being Frugal tomorrow for a discussion of Baby Step 3: Save up 3-6 months of expenses in savings, which Ana at DebtFREE-Revolution is now ready to move on to. Congratulations at paying off your last debt but the house this week, Ana!

Here are all of the articles thus far from the M-Network series:

Comments

  1. lu3 Says:

    February 28th, 2008 at 10:04 am

    One argument I never see in the Lowest Balance vs Highest Interest Rate discussion is the flexibility that the Lowest Balance system builds into your finances over time. For instance, if I have 12 debts (credit cards, car loans, student loans, etc.), I have 12 minimum payments that I have to pay each month. Once the lowest balance is eliminated, I only have to pay 11 minimums each month. By the time I have reduced this to 7 or 8, I achieve a certain flexibility in my monthly budget which can be really helpful if an unexpected expense comes along. In any given month, if I have to suspend the debt snowball to deal with a money crisis, the total of the minimum payments I have to make is much smaller than if I were working on the Highest Interest Rate balance and still had 11 or 12 minimums to pay. This frees up more money to deal with the crisis.

  2. paidtwice Says:

    February 28th, 2008 at 10:07 am

    @lu3 – that is true, and that is actually my spouse’s reasoning for wanting to hit the car loan next. For us though when we started, hitting the credit card first actually bought us that flexibility much faster because its minimum went down every month, as opposed to our other fixed debts. All of our balances were high so there would have been no quick victory/elimination whichever we chose.

    Thanks for weighing in!

  3. renegade Says:

    February 28th, 2008 at 1:01 pm

    I agree with lu3 and have found that to be a huge advantage. I need that cushion. But I’m ok with either way. However, I have figured out that you only gain about one month maybe two at the most by attacking the high interest rates one first vs. paying the lower balance ones. Yes, my debt snowball is probably much higher than most ($1500), so I would save around $3000 at most. But I look at it using both ways. I’m trying to find the higher minimum payment in my snowball with a lower total amount to pay off. I have several small items (less than $1000) but I have one credit card that is only $1800 but the minimum payment is $100. I’ve have figured out that by paying that one off first which is also the highest interest rate, then I can gain $100 to snowball with and therefore shorten my timeline by three months.

  4. Shanti @ Antishay Ventenne Says:

    February 28th, 2008 at 3:10 pm

    GREAT POST! I also agree with you that if you can keep your head around the long-term, paying off highest-to-lowest interest is the way to go. I wrote a whole post about it over here: http://www.antishay.com/?p=23

    I read a post at Five Cent Nickel called Dave Ramsey is Bad at Math: http://www.fivecentnickel.com/2005/05/09/dave-ramsey-is-bad-at-math/

    It inspired me to write the post linked to above, where I debated Dave Ramsey’s MTMO against David Bach’s The Automatic Millionaire. All in all, my conclusion was the same as yours: if you need to psychologically boost yourself by paying off a small debt, go for it! But if you’d rather pay as little as possible overall and not get discouraged by delaying your “successes,” the highest-interest-first plan is a good way to go :)

    I am loving the M-Networks review of the baby steps! Thanks!

  5. Small Cents Says:

    February 28th, 2008 at 3:15 pm

    Great post, and great topic. I’m a snowflaker, and now that I’ve paid off my last open ended debt and established a €1000 emergency fund thanks to my sudden windfall (to be discussed soon on SmallCents!), I’m going to divide my snowflaking in two to establish a bigger emergency/moving fund, as well as paying off the other debt. I think that I need the psychological security even though the numbers don’t add up.

  6. paidtwice Says:

    February 28th, 2008 at 3:20 pm

    @Shanti – there is actually a link to Five Cent Nickel’s math post in my post above as well. lol

  7. JoeTaxpayer Says:

    February 28th, 2008 at 6:31 pm

    I’m glad you see the flaw in the original debt snowball math. As you mention, the difference between high and low rate loans can be 12% or more. The $1000 sent to the 24% card saves you $20/mo, but to the 6% student loan is just $5/mo. Dave’s goals are great, I agree, high interest debt is a killer, his approach can just use some fine tuning.
    BTW, the $1000 emergency fund can cost $240/yr. Are there that many potential emergencies that cannot be addressed by using the card again if need be? A few good years and that $1000 can save $2000 or more in interest. (At 2%/mo, money doubles in three years. Yikes!)
    JOE

  8. paidtwice Says:

    February 28th, 2008 at 6:37 pm

    Um… you’re talking to someone who just fought her way through a ~$3600 car repair…. emergencies happen to me. More than I’d like. lol

  9. Debt Free Revolution Says:

    February 28th, 2008 at 11:13 pm

    I’ll second PaidTwice on the “emergencies happen” statement. I had three during the time I worked through baby step two: the furnace broke ($1140) and two car repairs ($538 and $509), so I am just not seeing how having a “baby” EF will cost $240 a year. Besides that, Baby Step ZERO is “No More Debt” so using the cards again is not an option. The object is to eradicate the debt: kill it, eliminate it, destroy it, and remove all traces of it off the face of the earth!

  10. That One Caveman Says:

    March 7th, 2008 at 12:27 pm

    I know I’m late for joining in the conversation, but I wanted to add one vector that people often don’t consider: the tax impact of various loans. We decided to pay off the car first, not because it had the highest interest rate or the lowest balance, but because it was the only loan that didn’t give us an advantage come tax time.

    Once our car is paid off later this year, we’ll work on paying down the home equity until we reach 80% total loan to value and we can take control of our escrow — allowing us to gather a much higher rate on that money than we can get in its current state. After that goal is reached, then we’ll attack my wife’s student loans and finally come back to the home equity and mortgage once those debts are eliminated.

  11. paidtwice Says:

    March 7th, 2008 at 1:10 pm

    Hey Caveman, that is an excellent point! I should have mentioned that :)

    Because my spouse’s student loan is at 9% and the car is at 4%, the difference in interest far outweighs our tax advantage. BUT – if it was my student loan (at 7%) we’d have to discuss it all more carefully. As it stands now, by the time I address my student loan, the car will already be paid off.

  12. Bill Says:

    March 22nd, 2008 at 2:23 pm

    Here is another idea to throw on top of the debt. It takes a little painting first to see the big picture. Here is the basics we will work with in this example. Say you have high interest credit card, and most of you have high interest if you have a balance over 2 years because the terms of the card state that they will take the interest for the month as a “cash advance” and cash advances are at 29% plus rates. When you make your payment it is applied to the LOWEST interest earning balance, so over time your balance is converting to the higher rate.

    Okay here we go you have a balance of $3000 on our imaginary CC at a rate of 19.99% (I know some of you would die for these kind of low rates) Your minimum payment is $120 and the interest on the balance of 3k is $47.50 a month. (which converts to 29.99%by cash advancing) For this to work you must itemize your household budget and figure out how much you spend with debit card, check and automatic withdrawal that you can pay with your high interest credit card. (be patient read on).

    Let’s assume that each month you are spending $1,000 a month on gas, grocery, utilities, entertainment and fun money from your debit or checking account. Take that $1000 plus the $47.50 in interest and make your monthly payment. Then as the month goes along charge the $1,000 back onto the card. Here is what happens… First the $1,000 is sitting in the interest free grace period and your interest for accruing for the month on the remaining 2k has dropped to $33.32 saving $14.18 a month. Plus because you made the $1,000 cash flow payment you have no minimum payment (except for the interest payment to stay even with the balance) so you can add $72.50 to the debt you are snowballing!!!!

    Second month you pay $1,000 + 33.32 to the Credit card and $$86.68 to the snow ball target account. Total monthly savings = $86.68. Yearly savings of $1,040.16 IF this credit card is your snowball debt target you pay it off in 2 years WITH OUT changing your current spending habits. The banks would rather you did not use your credit card as a tool. They want you to look at it as a safe way to spend. Okay now you guys who are already beating up your calculators let me know where this is wrong. My fiancée paid a 87k mortgage off in 6 years by doing this, by creating CC debt with balance transfers to the credit card from her mortgage principle and cash flowing the debt away with her disposable income. Good luck. Write if you want other ideas as my friends say I’m full of em’ or was it it?

  13. Chris Hutcherson Says:

    September 29th, 2008 at 4:24 pm

    The biggest thing ever to help our family was reading Total Money Makeover by Dave Ramsey. Not only did we cut our credit card bills in half each month, but we only took out half the amount of trash as we normal did, one can instead of two! Amazing how far a little effort goes. :)

  14. Joe Says:

    January 23rd, 2010 at 12:08 pm

    I would offer serious disagreement to paying off a Federal student loan before a car loan. You don’t give any specifics, however you should take into account the following:

    -> Student loans can often be placed into deferment or forbearance if you’re unable to pay. A car loan cannot.
    -> Student loan interest can be tax deductible based on your situation, which can decrease the real interest rate of the loan up to your federal tax bracket (i.e. for 25% tax bracket, at 6.8% student loan has an effective rate of 5.1%).
    -> Student loans are forgiven upon death.
    -> A car is a rapidly depreciating asset, so you can become upside-down on your loan quickly. The value of your education and career can increase over time.

Multiple mini payments add up!

Day 4 of NCN’s 33 Days and 33 Ways to Reduce Debt Challenge is about Extra Payments Extra Deposits. Basically it boils down to making more than one payment a month, be it to your savings account or snowflaking to debt.

Any of the regular (or even casual) readers of this blog know that I am a HUGE fan and practitioner of the mini payment concept. As *soon* as I get money that is earmarked for snowflaking (surveys, selling things, unexpected gifts) off it goes to the credit card. The very moment it hits my bank account it is bounced off to the credit card. Very very often if one was to look at my bank statement online there will be what I call matching payments. There will be a deposit for an amount (like $10.69) then the very next line is an online payment to Capital One for the exact same amount. This will have to be altered slightly as I change to Citibank that only allows 4 payments per billing cycle, but I aim to make it a weekly event instead of an instant event with a similar effect.

To illustrate this in action and the power of making these mini payments, I’ll dissect my last billing cycle with Capital One . My minimum payment due was $117. I made one large payment, that included my $117 minimum payment, of $323.01. So $206.01 of that was over and above the minimum. But that’s not all. In addition to that snowflake, I made payments in the amounts of $55.54, $23.62, $4.28, $3.00, and $12.00 over the course of the billing cycle for a grand total in payments of $421.45, the total amount over the minimum being $304.45. Without making those extra mini-payments, I would have missed out on reducing my principal by close to $100. That’s a lot of money to me! I could have saved them all up for one big snowflake but something might have happened to make me spend some of it before it got to the credit card. You may think that it isn’t worth it to make a $2 or a $4 payment but it really is. Every little bit adds up.

All these extra instantaneous mini payments are really helping me get out of debt faster than I ever thought possible. Seeing my debt total creep downwards really keeps me focused and motivated. I recommend everyone try it! I like the big payments too of course but I like the multiple mini concept as well. I intend to employ a similar tactic when saving is my primary goal, and I hope I get great results!

Comments

  1. Mya Says:

    September 2nd, 2007 at 2:56 pm

    Great example of capitalizing off every little bit of income. You’re an inspiration to me to NOT tell myself, well it’s “JUST” $10 that I’m spending..

  2. paidtwice Says:

    September 2nd, 2007 at 4:56 pm

    I have had a lot of those “It’s just $10….” discussions. lol.

    Thanks for stopping in!!

  3. Lisa Says:

    September 2nd, 2007 at 8:07 pm

    I just found your blog today and you have really made me think about where my money is going. After reading your blog I realized I have no idea. Thank you

  4. paidtwice Says:

    September 2nd, 2007 at 8:14 pm

    Thanks for stopping by! I had no idea for a whole long time too.

  5. cooking4two Says:

    September 11th, 2007 at 9:36 am

    Way to go! I just found your blog and wow, what an inspiration you no likely are to many. We’ve employed a similar scenario to get my husband’s car paid off (our only debt) and it works like a charm! Keep pissing off those creditors (they hate us for doing this, you know!) and keep fighting the good fight against consumer debt!

  6. paidtwice Says:

    September 11th, 2007 at 9:00 pm

    Thanks! Keep fighting the fight!

  7. Danielle Says:

    October 3rd, 2007 at 1:38 pm

    What a great idea! I do a lot of little things for side $$ and I totally want to do this- I want DH’s student loan debt GONE!

  8. Kimberley Says:

    October 10th, 2007 at 3:16 pm

    My credit cards also limit the number of times you could make payments on their sites. However, I found that by making the payment from my bank’s site (ING) I can send as many payments as I want, as often as I want. Just thought I would share my work-around to keep you on track!

  9. paidtwice Says:

    October 10th, 2007 at 10:17 pm

    That’s a good idea! I was worried they would just start rejecting my payments from my bank but I guess they really can’t do that… lol

  10. seaar2000 Says:

    November 3rd, 2007 at 6:53 am

    Some of my friends think I am nuts putting more than the minimum on my payments and putting a little bit here and there on my car payment each month, but I am happy to say I am eight months ahead on my car payment.

  11. Steve in W MA Says:

    March 31st, 2010 at 5:14 am

    Those small dollar amounts that are so easy to fritter away on unimportant purchases are great for applying to important goals like debt reduction and savings! “Out of sight, out of mind” is a good maxim and getting that spare money out of sight by sending in to your bill or to your separate savings account is a fantastic way to maximize the use of it.

From Theory To Practice: The Festival of Frugality

Welcome to I’ve Paid For This Twice Already… and the 117th Edition of the Festival of Frugality! This edition of the festival shows the ways people are thinking about frugality in their own lives – the “tips” posts outnumbered the “mindset/thinking” posts by almost 3 to 1! In our lives now, there is a need for practical applications of frugal principles that we can put to use in our own lives and really see the difference. Hopefully you can not only learn to think more critically about frugality from this festival, but learn several tips you can immediately put into practice in your own life. I sprinkled some relevant frugal quotes as food for thought throughout the sections. Enjoy!

Editor’s Picks

“Great minds have purposes, others have wishes”- Washington Irving

Developing a Frugal Lifestyle

“Make the most of yourself, for that is all there is of you”– Ralph Waldo Emerson

Frugality, Cheap, or Efforts Thwarted

“They can conquer who believe they can”-Vergil

  • Not The Jet Set discusses the Frugal vs Cheap distinction and where they draw the line in The Buck Stops Here. I have had that cheese. I had to throw it out. They’re right that if you spend less but waste it, that’s not frugal at all.
  • Savvy Frugality shares about freegans in Extreme Frugality: Freegans. Is that frugal, or cheap, makes sense, or is frightening? You decide.
  • College of Cash tries to be frugal and get coupons, but is thwarted in Where are the Good Coupons?.
  • A Dollar A Day struggles against their internal tendencies and tries to simplify with Living a simpler life.
  • Money Under 30 asks if money trumps love with Is it Okay to Get Married With Debt?

Frugal Tips For the Home

“The chains of habit are too strong to be felt until they are too strong to be broken”– Samuel Johnson

Frugal Tips For the Car

“He who does not economize will have to agonize”-Confusius

Frugal Tips for Events

“The more we do, the more we can do”-William Hazlitt

Frugal Shopping Tips

“Beware of little expenses; a small leak will sink a great ship”– Benjamin Franklin

Other Frugal Tips

“Consider the postage stamp; Its usefulness consists in the ability to stick to one thing till it gets there”– Josh Billings

That’s it for this edition! Be sure to pick your favorite entries and share them with your readers! Have a frugal day!

 

Comments

  1. Four Pillars Says:

    March 18th, 2008 at 7:07 am

    Nice job on the carny! Thanks for including us! :)

    Mike

  2. Laura Says:

    March 18th, 2008 at 7:45 am

    I love the Festival. Great job!

  3. Stephanie Says:

    March 18th, 2008 at 8:21 am

    Thanks for hosting! Looks like a good one this week!

  4. Value For Your Life Says:

    March 18th, 2008 at 9:14 am

    The carnival looks great,and the theme of practical applications of frugal principles is going to be extremely helpful to all of the readers. I am honored that you chose my post as an editor’s pick–just the kind of encouragement I needed as my blog is still in its baby months! Sincerely, Amanda

  5. Jinger Says:

    March 18th, 2008 at 9:52 am

    I was glancing at the front page of my local paper online this morning and the title Snowflaking jumped out at me. Take a look: http://www.austinamericanstatesman.com. Scroll down to Life and Arts-Life Guide.

    Wow!

  6. emilyg Says:

    March 18th, 2008 at 10:41 am

    Thanks so much for including my post!

  7. Lisa Says:

    March 18th, 2008 at 10:44 am

    Thanks for hosting this week!
    Lisa

  8. paidtwice Says:

    March 18th, 2008 at 10:48 am

    Jinger! Wow! Thanks for pointing that out to me! :) :)

    I find it amusing the quote they took from Blueprint is a guest post I wrote for him :)

  9. Jinger Says:

    March 18th, 2008 at 11:23 am

    My curious nature is back again…do you and your husband have a weekly or monthly allowance for personal items just for yourselves? I am trying to give myself a small set amount a week in cash.

    Thanks.

  10. Funny about Money Says:

    March 18th, 2008 at 11:36 am

    Terrific festival! It’s interesting to see how many people are thinking along the same lines as we watch the economy implode.

    Thanks for including Funny’s Make It from Scratch post!

  11. paidtwice Says:

    March 18th, 2008 at 11:48 am

    @Jinger – we don’t right now, but that will probably change with April’s budget. We were good about it for a long time but it is time now to create a little more wiggle room in the budget. :)

  12. Bryce Says:

    March 18th, 2008 at 1:03 pm

    Thanks much for listing my post. I have been picking up other great frugal ideas from this Festival.

  13. RC@ThinkYourWayToWealth Says:

    March 18th, 2008 at 10:57 pm

    Great Carnival! Thanks for including my post!

  14. Ken Says:

    March 19th, 2008 at 11:38 am

    Just FYI – The link for the TheFinancialBlogger site doesn’t seem to be working.

  15. paidtwice Says:

    March 19th, 2008 at 11:49 am

    @ Ken – hmm it worked when I posted it, maybe his site is down. i will investigate. Thanks!!

  16. Kris Says:

    March 19th, 2008 at 11:40 pm

    Hey PT – thank you so much for running this week’s festival, and for including my post. Also … Sandra Lee … oy vey. She’s a piece of work, isn’t she?

  17. squawkfox Says:

    March 20th, 2008 at 12:59 am

    Thank you Paid Twice for including my article! I’ve linked back via Carnivals. Thank you for hosting this fine festival!

  18. Emmie Says:

    March 21st, 2008 at 3:52 pm

    I will have to spend days going down that list, but they will be days well spent!

  19. PT Says:

    March 23rd, 2008 at 2:38 pm

    Great job on the carnival. Thanks!

  20. deepali Says:

    March 23rd, 2008 at 11:19 pm

    Thanks for the link!

  21. Russell Says:

    March 29th, 2008 at 5:34 pm

    I’ve scanned through your work and was so taken with it that I bookmarked it for later reading. Just wanted to say that it is very interesting and some good lateral points of view which I will be following through.

    Thanks for it all and I’ll watch out for more.
    Regards
    Russell

Here’s Your Team for The Superbowl of Personal Finance!

Welcome to I’ve Paid For This Twice Already, the heart of the snowflaking empire, where frugal living and putting your money to work for you a penny at a time abounds. I’ve been working at getting out of debt and on the path to true financial freedom, and I’m delighted you’ve joined me, be it your first visit or your thousandth. This past weekend was the Superbowl, the championship of American Football. So this week, I’m excited to bring you one half of another epic showdown – the Carnival of Personal Finance vs The Festival of Frugality! I’ve conspired with Lynnae at Being Frugal (this week’s host of the Festival of Frugality) to bring you a showdown between the two finance carnival heavyweights. We’ve got our own version of football, where the ball is your finances and the goal is financial freedom.

I’m paidtwice, your coach this week for the Ultimate Personal Finance Team, made up of your submissions this week to the Carnival of Personal Finance. I’ve got some MVPs leading the pack (editor’s picks) and then our offense – the ways you’ll achieve your goal, and the defense – ways that the goal of financial freedom will be thwarted. And keep your eye out for the special teams contributions! Sometimes that makes all the difference.

On Wednesday after both teams have been revealed we’ll each run a poll with all of our MVP picks head to head – which entry, and which team, will win the ultimate finance showdown? You decide!

Here’s the CoPF team MVP selections (Editor’s Picks) :

Our Offensive MVPs include:

Our MVP Running Back, My Dollar Plan presents Investment Snowflaking. This is a great adaptation of the snowflaking philosophy to investments. Watch your money grow as small steps add up to huge changes!

Our MVP Offensive Lineman is Quest for Four Pillars, who finds it hard to say no, but manages to eventually even when it has cascading life effects in Saying No Is Hard To Do. Protect the assets at all costs!

Our MVP Wide Receiver is Plan Your Escape, with 8 reasons Why Small Houses Are Better Than Big Ones. Minimizing your housing expenses makes a huge difference in your bottom line, in obvious and not so obvious ways alike.

Our Defensive MVP is:

Our Defensive Line MVP is Smart Easy Money, who tells a story of a clogged drain and just accepting the default in A Clogged Drain and Living By Default. A really thoughtful story about how if we just accept what we’re given we never get anywhere.

And finally, our Special Teams MVP:

Our MVP Kick Returner is Consumerism Commentary with The New Emergency Fund: Five Components of an Emergency Plan. Diversifying our fund keeps you prepared for all true emergencies and here is great tips on how.

And the rest of our lineup!

Our Offense!

The Quarterback, the brains of the operation:

 

Offensive Line – Keep the Defense From Stopping Your Plays! :

Running Backs – The small moves matter! Small positive steps add up:

Wide Receivers – The Big Plays That Make a Difference:

Tight Ends – they block, they catch, they can do anything! A mixed bag of entries:

Our Defense!

Defensive Line – We Attack You At Brain Level! Must destroy QB and all plans! :

Secondary – The Big Plays That Throw Us Off Track:

Linebackers – They stop all the little positive plays from happening:

Special Teams:

Kick returner and Punt returners – sometimes you’re up, sometimes you’re down:

Thanks for visiting the Carnival and remember if you are a blogger to share some of your favorite articles with your readers! And be back Wednesday to vote for your favorite MVP!

Comments

  1. glblguy Says:

    February 4th, 2008 at 6:02 am

    EXCELLENT job Paidtwice! Thank you for hosting!

  2. Tejvan Pettinger Says:

    February 4th, 2008 at 6:08 am

    Thanks for hosting, though here in England, American Football has always been a mystery to me!

  3. Colonel Cash Says:

    February 4th, 2008 at 6:38 am

    Very nicely done! Thank you!

  4. Dividends4Life Says:

    February 4th, 2008 at 6:54 am

    Thanks for hosting this week’s carnival and including my article “Passing the Torch”.

    Best Wishes,
    D4L

  5. FourPillars Says:

    February 4th, 2008 at 7:00 am

    Great game PT!

    Thanks for the ed. pick.

    Mike

  6. Mrs. Micah Says:

    February 4th, 2008 at 7:19 am

    I suppose mine is a big linebacker idea. :) Really creative format, I like it!

  7. Great theme. I was a RB in high school too! Sweet!

  8. Lynnae @ Being Frugal.net Says:

    February 4th, 2008 at 8:24 am

    Thanks for hosting! And bring on the competition! :)

  9. hgstern Says:

    February 4th, 2008 at 8:28 am

    Outstanding job!

    Thank you for hosting, and for including our post.

  10. Mike-TWA Says:

    February 4th, 2008 at 8:51 am

    Good job, PT. Thanks for hosting!

  11. Dividendgrowth Says:

    February 4th, 2008 at 9:08 am

    Good job PT, and thanks for sharing my watchlist with the rest of the gang ;-)

  12. startandstep Says:

    February 4th, 2008 at 9:21 am

    I love the football metaphor! Especially since the Super Bowl was such a good game to watch this year. Thanks for hosting!!

  13. vh Says:

    February 4th, 2008 at 9:37 am

    What a clever theme!

    Thanks for hosting this huge round-up, and thank you for including the latest of Funny’s Ten Money Principles!

  14. Flexo Says:

    February 4th, 2008 at 9:45 am

    Wow! Excellent Carnival! Thanks for hosting. Great articles all around.

  15. squawkfox Says:

    February 4th, 2008 at 10:09 am

    Wow. This is a huge carnival! Thank you for hosting and including me in the big game!

  16. Randall Says:

    February 4th, 2008 at 10:31 am

    Grrruff, Time to take out the offensive line!! Thanks for the linkey, Great CoPF.

  17. the simple nickle Says:

    February 4th, 2008 at 10:34 am

    great job, as always, and thanks for the mention.

  18. Pinyo @ Moolanomy Says:

    February 4th, 2008 at 11:11 am

    The Giants won! :-)

  19. Pete Says:

    February 4th, 2008 at 11:11 am

    Another great carnival, as always. Thanks for the addition of my article on free redbox rentals for life. I can’t believe how much traffic that one article has gotten me. I guess people really like getting free movie rentals, huh?

  20. David Says:

    February 4th, 2008 at 11:30 am

    Thanks for hosting!

  21. Peter @ Plan Your Escape Says:

    February 4th, 2008 at 11:35 am

    PT: Thanks for including my article as an MVP! I love the Superbowl theme too … what a fun game to watch last night.

  22. Shana Says:

    February 4th, 2008 at 11:52 am

    Thanks for including me as the Defensive Line Pick! Touchdown!

  23. Money Blue Book Says:

    February 4th, 2008 at 1:29 pm

    Great job of hosting! Thanks for including! :)

  24. Cool theme! Thanks for including my post and putting this together.

  25. Tight Fisted Miser Says:

    February 4th, 2008 at 6:45 pm

    Thanks for hosting and including my article.

  26. Patrick Says:

    February 4th, 2008 at 7:41 pm

    Great job hosting the CoPF! :)

  27. CiaranFromChance Says:

    February 4th, 2008 at 8:47 pm

    Thanks and I appreciate the placement. If I had to pick any position on the field I’d be a D Back, so you got me pegged!

    Nice job, great theme.

  28. Savvy Frugality Says:

    February 4th, 2008 at 9:53 pm

  29. Dogberry Says:

    February 4th, 2008 at 11:09 pm

    What a list! And reading through them I will come out farther ahead than I did on the game :)

  30. Chief Family Officer Says:

    February 4th, 2008 at 11:28 pm

    Thank you for hosting such a fun carnival!

  31. AllAboutTheBen Says:

    February 5th, 2008 at 12:17 am

    An excellent carnival this week. Thank you for hosting and including my entry.

  32. Stephanie Says:

    February 5th, 2008 at 9:10 am

    What a fun hosting idea!

  33. BeThisWay Says:

    February 5th, 2008 at 5:52 pm

    A very timely take for this festival. Thanks for including my article on shopping for auto insurance! Lots of great articles, as always!

  34. Dan Says:

    February 6th, 2008 at 11:51 pm

    Great job on the carnival and thanks for making me a linebacker. That was my favorite position to play, which is enough to make me subscribe. Oh, and also the great content you put up daily.

  35. Millionaire Mommy Next Door Says:

    February 10th, 2008 at 1:10 pm

  36. FIRE Finance Says:

    February 10th, 2008 at 5:26 pm

    Fantastic Carnival. Thanks for hosting and including our post in it.
    Cheers,
    FIRE Finance

Five Golden Rules For Snowflaking

Welcome to I’ve Paid For This Twice Already… where frugality and careful money management is helping us get out of significant debt one penny at a time. As part of the 12 Days of Christmas – Personal Finance Style project, I bring you my contribution of the golden variety. No, not five golden rings (although I admit that might be nice) but Five Golden Rules to successfully snowflake your way out of debt or into saving.

What is a snowflake, you may ask? I’m not talking about the fluffy white stuff outside right now for many of us (although I think they’re rather pretty), I’m talking about small amounts of money saved or earned that are applied directly to debt or into savings before they melt away into who knows where. If you are new to the concept, I invite you to read my snowflaking primer to learn all about how snowflaking works. Basically, any extra money that you can come up with from earning more or spending less can be a snowflake. I earn money for snowflaking from doing online contracting work, surveys, and this blog, for example, and I also try to spend as little as I can and apply the savings to pay down our debt one snowflake at a time.

Here are my Five Golden Rules for Snowflaking:

1. Snowflake early and often

This is really the overarching theme to snowflaking success. Snowflake whatever you can whenever you can. The more often you snowflake, the more it will become a habit to look for snowflakes. Identify them wherever you can and keep making those snowflake payments. The more ingrained the habit, the more you will find.

2. No amount is too small to be a snowflake

I have snowflaked as little as $1.04 and as much as $1313.74 and everything inbetween. Any amount can be a snowflake, and any amount can make a difference. Especially when you are dealing with a debt that has interest charged to it (which most are) or putting money into savings earning interest, don’t wait to get to a certain amount before applying that snowflake. Whatever the amount – snowflake it.

3. Anything can be a snowflake

Did you just save $3.40 at the grocery store using coupons? Did you just spend $5 less on shoes than you budgeted? Snowflake it. Just like any amount can be a snowflake, snowflakes can come from any source. They don’t have to be from a specific income stream or a specific budget item. Find them wherever you can.

4. Snowflake as immediately as possible

When you save or earn money to snowflake, do it immediately. Transfer it to your savings account or make an immediate payment to debt. If you can’t do it immediately, keep very careful track of the exact amounts and pay them or save them as soon as possible. Right now, I am limited to 4 electronic payments a month on my credit card, so I keep track of all my snowflakes each week and make a payment once a week from my checking account. My past credit card, I could pay as often as I wanted, so I would send an electronic payment as soon as I could get to the computer after finding a snowflake. Don’t give yourself a chance to spend the snowflake on something else.

5. Keep track of your snowflakes to use for motivation

A lot of small amounts may not seem like a whole lot if you don’t keep track of them. As well as watching your debt total shrink or your savings total rise, keep track of the snowflakes themselves. Keep a running total once a month to see how much all those small amounts add up to. You may be surprised, I sure was. It may not seem like much while you are doing it but a lot of little bits add up to one big chunk of debt demolished or savings achieved.

These five rules sum up the secrets to my snowflaking success. Since really committing to and implementing this strategy in June, I’ve paid off over $7000 to the principal on my debts, close to $5000 of that to my credit card debt alone (my snowflake target), almost as much progress as I made the 3 years before that combined. Snowflaking really works, and I hope you’ve picked up a tip or two! If you have any questions or tips of your own, please share them in the comments!

Follow the entire 12 Days of Christmas – Personal Finance Style project:

 

Comments

  1. Amanda (Me vs Debt) Says:

    December 14th, 2007 at 8:37 am

    Thanks for the tips. I’m a big fan of the snowflake method. Its surprising how quickly they add up!

  2. Mrs. Micah Says:

    December 14th, 2007 at 11:11 am

    Woot! :)

  3. debtdieter Says:

    December 16th, 2007 at 4:12 pm

    I’m such a fan of your snowflaking method, I’m going to make it my new years resolution over and above my 2008 goals.

  4. InTheHole Says:

    December 17th, 2007 at 5:28 pm

    I really really love the snowflaking concept. Once I get my monthly budget planned out, I plan on snowflaking a lot.

    It’s amazing how much money gets “lost.”

    Thanks!!

  5. Dividends4Life Says:

    December 18th, 2007 at 1:37 pm

    Debt elimination is always good! thanks for sharing how you approach it.

    Best Wishes,
    D4L

  6. dawn Says:

    December 18th, 2007 at 5:52 pm

    Ok I am going to try this method. I was “snowflaking” in a way before I read this, but into a savings account for rainy days, however I now have freed up enough money to contribute to that on a weekly basis. So now that snowflake money will go toward a credit card that is charging interest. I am excited to see what effect this has over the next year! It is projected to be paid by Dec 08, I’ll see how it gets bumped up with the snowflakes….I’m so excited!

  7. kentuckyliz Says:

    December 21st, 2007 at 6:54 am

    Hi! I’m here because we’re discussing snowflaking over at Dave Ramsey’s Total Money Makeover discussion forums and I followed a link.

    We DR koolaid drinkers believe in the debt snowball, and the snowflaking concept is a great complement to the snowball idea. Kudos! On the DR TMMO boards, we’ve done a challenge to snowflake the rest of December and to share what we did and how much it’s yielding. I started yesterday, found three pennies on the floor in the back office workroom area where I eat my lunch. LOL

    Your site looks interesting, I’ll read more.

Tell All Tuesday – Standing Still

Because of the tire situation detailed in the post this morning, the actual finances are standing still this week. I’ll write about it all in much more detail tomorrow, but the short story is that I’m not paying the credit card bill quite yet as planned. It isn’t due until the end of the month and is at 0% interest, so it doesn’t negatively affect anything except my “right now” debt decreasing feeling. But hey, patience is a virtue. Patience. In all aspects.

So my actual numbers are the same as last week:

Current amount owed:

  • Credit Card (Citibank): $5,049.61
  • Student loan: $12,038.71
  • Spouse student loan: $12,308.71
  • Car loan: $4,001.78

Summary:

  • Debt at start of blog (6/19/07) : $36,451.71
  • Current total as of 10/09/07: $33,398.48
  • Principal paid to date $3,053.23
  • % debt paid (from NCN Network Chart): 8.38%

That doesn’t mean nothing at all happened this week – just nothing that got applied yet to debt.

I have a number of pending snowflakes: I have received $5 from doing surveys that is sitting in my savings account waiting for me to apply it to debt. I also have another $32.20 I am expecting to receive any time now also from doing surveys, and $2.70 in paypal that I am transferring to my checking account (left from the ebay sale) that will be applied to debt. So that is potentially $39.90 (if I get all the survey money in this month) for alternative income snowflakes. Not $100 yet but there is still some time.

I also have the $82.80, which was last month’s surplus, to apply to debt this month, and I still will be. Just after my spouse is paid again instead of this first paycheck, due to the tire issue.

I received my first credit card bill from Citicard – my minimum payment is only $75! That is not even 2% of the total balance! Whoa. I guess they really want me to have a lot of money left at the end of the 12 months to pay interest on. I didn’t even know the credit card could set a minimum under 2%. Heh. I’ll still be paying my self-set $200 minimum. I just thought that was interesting.

And craigslist is driving me crazy. I could write a whole post about this. Why are there so many time wasters on craigslist? I guess because it is free. I will get an email and respond back and forth several times and just when we’re working out the final details, they disappear. It happens a lot. I thought I had made two sales of $15-$20 each and both just evaporated. So… whatever. I’ll sell something someday.

That’s it for this week! By next week I’ll have paid the car payment (have to pay it a little early because of our trip) so I’ll have something to report. And hopefully I’ll have collected a few more snowflakes!

Comments

  1. Michele Says:

    October 9th, 2007 at 1:05 pm

    Hi!

    Don’t be too discouraged. It seems as if you are on the right track overall and setbacks will always be a part of the equation no matter what we do.

    I am a new reader and wanted to sincerely thank you for the “snowflake” idea. The concept has really helped me. I was doing some surveys, but have since picked that up and have come to realize that even $4 checks applied to debt make a difference over the long run.

    I know that you are in a bad place re: craigslist right now, but I tried that out for the first time since reading your posts about it. Call it beginner’s luck I guess…but I made two $10 sales within 24-48 hours of my posts!!

    I’m participating in a consignment sale this weekend. Last time I got $109 that I frittered away…this time whatever I make will go straight to debt.

    Again, thanks for your blog and the idea of snowflakes…winter is right around the corner!!

    Michele

  2. Cynthia Says:

    October 9th, 2007 at 3:06 pm

    I just have to commiserate on the Craigslist venting. I’ve had that happen to me many times as well. And then I’ll hit a string of very interested parties who come by the next day to pick up their items and pay my asking price without blinking. I’m even shipping out something tomorrow to a person 5 states away that found my listing on Craigslist. She paid with paypal and the transaction has gone quite smoothly. I wish all sales were that easy!

  3. Stacey Says:

    October 9th, 2007 at 5:39 pm

    ummm, snowflakes? I am very interested to hear your explanation….do you have a post that explains this?

  4. Kimberley Says:

    October 10th, 2007 at 4:39 pm

    Actually I would like to hear the full explanation of snowflakes as well. You seem to have set a goal for them. From what I gathered linking around your site I may have a suggestion for you. I started out with the surveys and “Get paid to” sites as well. Recently (6 months) I have started signing up for mystery shopping. Again, this won’t make you rich – but you may find it catapulting you a little closer to your $100 a month. I have signed up with lots of sites and some pay reimbursement + $, some are free and pay cash. When I started I only did free ones until I was sure I would be getting paid. A good starting place (free) is mysteryshopping dot org.

    I would be happy to give you more details about exactly who I have worked with and the jobs. Just email me so I don’t go on and on and on and on on *your* blog. :)

  5. paidtwice Says:

    October 10th, 2007 at 10:28 pm

    Thanks!

    Snowflakes are a mini version of the Dave Ramsey debt snowball idea. I can’t take credit for it at all. I will throw together a post explaining it though in the next few days. :)

    I’ll email about the mystery shops :)