I’ve Paid For This Twice Already…

Archive for the ‘snowflake’ Category

There is this misconception among many people about how snowflaking is only for debt reduction. The concept and practice of snowflaking, or using small amounts of money from spending less or earning more to achieve your financial goals is a great debt reduction tool, but it isn’t limited to just debt reduction. Snowflaking is a universal money management concept that can be applied to whatever financial goals you are striving to achieve in life.

Anyone can snowflake. Anyone can be a snowflaker. No matter where you are in life or what your goals are. Are you debt free? Snowflake your money to your savings goals. On track with your savings and retirement funds? Snowflake towards that treat you’ve been saving for. Or snowflake towards your personal financial freedom by investing in yourself and your future.

Still not clear on what snowflaking is and what it can do for you? The concept of snowflaking is simple: keep track of small amounts of money you earn above the norm or save by frugal actions, and apply those small amounts carefully and consistently towards your financial goals. Snowflakes are very small things, but together they add up to a very big difference. Snowflaking takes creativity, patience, and perseverance. By paying attention to the small things, and making sure that the small amounts matter, you have to be able to see past the separate dollar amounts and take in the big picture. Snowflaking teaches scope. Change comes about in big actions, but also in the accumulation of small ones. Letting the small actions fall through the cracks can derail your plans as simply as a big one can. Take control of those small actions and make them work for you. It is all about the accumulation.

If you think snowflaking is something you can apply to your life to achieve your dreams, I invite you to check out the member blogs of the Snowflake Revolution. Each blog uses the concept of snowflaking, or making the little things matter, to improve their financial future.

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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!

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When I started this blog, I didn’t know much about the personal finance information that was out there. Because I didn’t know much, I mistakenly assumed the little I did know must be common knowledge, and acted as such. But after several questions about “snowflaking” from visitors, readers, and commenters, I realized that just because the “Debt Snowball” popularized in recent times primarily by Dave Ramsey was known and understood by most people that came across my site, snowflaking as a related but slightly separate concept was not.

I learned about the concept of snowflaking from a Debt Support Messageboard at iVillage that I began to frequent when I decided to find a way, no matter what, to get rid of our credit card debt once and for all. I didn’t know who Dave Ramsey or what a debt snowball was, and I certainly had no idea what snowflaking meant. Through that board I learned about the idea of saving or earning small extra amounts of money and paying it directly to debt, and calling those extra-over-minimum payments snowflakes. I really embraced the concept and the method (and I don’t know the origination of the term, if it was coined by that messageboard or was adapted from somewhere else) and started challenging myself to find snowflakes whenever and wherever I could.

When I branched out to starting my own blog about debt reduction, I talked about snowflaking as if it was a commonly understood concept because, as I stated in the beginning of this post, I had no idea it wasn’t. Once I realized my constant reference to snowflaking wasn’t necessarily understood by my everyday visitors, I wrote my snowflaking primer. I continued to snowflake down my credit card debt, and a few weeks ago, as part of a 12 Days of Christmas - Personal Finance Style project, wrote my Five Golden Rules of Snowflaking.

And then something interesting happened. I submitted that post to the Carnival of Personal Finance, and the host that week, JD of Get Rich Slowly, chose it as one of his editor’s picks. Mrs. Micah: Finance for a Freelance Life had submitted her post asking for people’s choices for best personal finance practices of the year (in which she had chosen my snowflaking primer as her choice) to the same carnival, and her post was subsequently picked up by The Consumerist, which also mentioned my snowflaking primer. And people started visiting. And reading. And learning about snowflaking, and talking about it themselves.

The snowflake revolution has begun.

Every day it seems I get another notification of a link to one of my snowflaking posts, where someone is talking about it on their own blog or website. Both my Five Golden Rules and my Primer posts get dozens to hundreds of hits a day from visitors who saw the snowflaking concept referenced elsewhere and followed it here. And I can’t be more delighted.

I didn’t create the concept of snowflaking. I don’t claim to be the end-all of information about it either. All I am is a very enthusiastic follower of the concept and practicer of the ideals and principles behind it. And with it, I’ve been decimating my credit card debt at a fantastic rate. Find ways to save money and pay that saved money directly to debt. Find ways to earn more money and pay that earned money directly to debt. Someday in the future, instead of snowflaking to debt, I’ll be snowflaking to savings, and my future will greatly thank me for it.

The revolution has begun. Why don’t you join the revolution, too? There’s room for everyone on board.

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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:

• Day 1: Being Frugal: The Best Way To Manage Money
  
• Day 2: Credit Withdrawal: Two Guaranteed Ways To Financial Freedom
  
• Day 3: DebtFREE-Revolution: Three Paid Cards
  
• Day 4: Plonkee Money: Four Calling Tips
• Day 5 here!: Five Golden Rules of Snowflaking
• Day 6 @ Moolanomy: Six Streams of Income
• Day 7 @ Working For Financial Freedom: Seven Tips When You’re Swimming (in debt)
• Day 8 @ Rocket Finance: Eight Maids a Milking
• Day 9 @ Cash Money Life: 9 Financial Lessons
• Day 10 @ Gather Little By Little: 10 Creative Ways To Cut Up Your Card
• Day 11 @ Mrs Micah - Finance for a Freelance Life: 11 Ways to Get Paid for Pipers
• Day 12 @ Being Frugal: 12 Frugal Things You Can Do This Week
  

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Even the bad news we got about our mortgage payment yesterday cannot dampen my excitement about the big payment we made this week. The big snowball payment occurred, and our debt has been knocked back in a big way as far as milestone numbers. I couldn’t be more excited. Let’s get right to those numbers:

Debt at start of blog (6/19/07) : $36,451.71

Current total as of 12/03/07: $29,281.69

Principal paid to date $7170.02

Broken down into:

• Credit Card: $1830.46 (made $1313.74 snowflake this week)

• Student loan: $11,878.03

• Spouse student loan: $12,002.27

• Car loan: $3570.93

% of total debt paid off (from NCN Network Chart) : 19.67% (last week 16.07%)

Our total debt dropped under the $30,000 mark, so we met our December 2007 goal of doing so! And our amount paid to principal is now over $7000 in just 6 months time. And the huge huge excitement - we paid $1313.74 to our credit card, dropping that number from a little over $3000 to under $2000! Hurrah! That amount came from the windfall, plus the surplus from last month, some survey payments, and blog income.  And the % of debt paid since June jumping to almost 20% has made me giddy with anticipation of when it is all finally paid off.

I do have a few more pending snowflakes in the form of survey payments, but only on the order of about $20. I also have some pending survey referral payouts that should happen this month as well. I haven’t found the time to sort my childrens’ outgrown clothes and bring some to Once Upon A Child to try and sell, but I am going to try and do that in the next few weeks.

But all in all - a great week to report. I don’t know if anything will happen between this week and next, since I won’t be making any of my monthly standard payments until the week after that, but you never know. Sometimes snowflakes show up from the most unexpected places.

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