Snowflakes, Snowballs, Snowmen Part 2

Day 34- Snowflakes, Snowballs, Snowmen Part 2

Snowballs. A few days ago, I was reminded of the gag in the cartoons, where the single snowflake rolled down the hill, getting larger and larger until it would crush the antagonist. Often, this chain reaction would be caused by some sort of action the antagonist created in order to trap the protagonist.

Debt can be a lot like the snowball. Something small paid on a credit card could put you in debt, which spirals out of control. JD at Get Rich Slowly wrote about how he easily got $25,000 of debt in a matter of a few years and how it took him 20 years to get out of it.

I am hoping to get my debt under control in less than two decades, especially since I want to go to grad school and what not.

So, if accumulating debt is like a rolling snowball, why not think of snowballs as way to get rid of debt.

In Richmond, I liked throwing snowballs at snowdrifts on roofs. I would throw a couple of balls up there and watch an avalanche come falling down.

So any extra income I may have, I am going to treat as those snowballs and they will, in the end, bring down the debt. Yesterday, I wrote about snowflakes and how they can be created into snowballs the be thrown at debt. But how does that work exactly?

Snowballs seem counter-intuitive. Unlike common practice, which tells us to pay off our largest debts first, snowballs pay off the smallest debts first. And when that debt is finished, you use the exact same money to pay the next smallest, followed by the next smallest and so on and so forth. Finally, you only have your largest debt to pay with no other debt to distract you.

We're In Debt has a list of Snowball Calculators so that you figure out how to exactly pay off your debts.

It sounds easy enough. But being so counter-intuitive, how do I exactly decide which debts to pay off first? I hold so many different types of debt, it is not so easy as just lining them all up. Tomorrow, we will discuss the different schools of snowball camps.

Competence Moment of the Day- Grocery shopping for the month and saving over $17! Make fun of me if you want, but Sunday Morning Coupons are pretty freaking cool.

Snowflakes, Snowballs, Snowmen Part 1

Day 33-Snowflakes, Snowballs and Snowmen Pt. 1

Snowflakes. Individually, not much on their own, but together, they can make a big impact. Similiarly, we can think about our spare change, odd jobs and windfalls as snowflakes which, when put together, can take a big bite out of debt.

Overall, I owe about $20,000 in debt. Most of that is owed to the government. Some of that, is owed to Earlham to pay for my month in Spain and Morrocco. A small part of that is to my parents, when I had a hard time making ends meet in December. And the tip of the iceberg is to Christine, to make sure the rent check cleared.

Every month, I have built into my spending plan debt payment. This is how much from my income I am willing to spend on debt payments. I make it a point to always pay more than the minimum if I can.

Any new income I get in the month goes directly into my snowflake pile.

Little things I do to snowflake won't make a big difference at all. For instance, the $50 I will get for dog sitting next week would probably not cover the interest on my student loans. And my coin jar would be nothing at all to Earlham. However. Either of those could pay back Christine no problem and leave a nice bit to pay back my parents.

That is the power of the snowflake. Snowflakes can be added together and make a snowball which can be thrown at your debt.

Techniques for snowflaking:

1. Spare Change- I have a sock that I call my sock of snowflakes. Everyday, I empty my pockets of spare and loose change and then I put it in the sock. I then keep it out of sight so that I don't dig into in order to by snacks a the convenience store. Sometimes I put dollars in there, too. The PNC down the street has a Coinstar-like machine that will then add it up and give me cash. For Free!

2. Odd Jobs- Next week, I am picking up two new odd jobs. I am house sitting for a friend of ours and I am also working the polls for the Primary election. Neither pay particularly well. But they are snowflakes for the taking. You can find some more at craigslist.com

3. Tax Rebate- Sure, Congress and President Bush want me to spend it on something shiny. But, if I can take that chucnk of change and pay off a chunk of debt, why shouldn't I?

4. Online Surveys- the good people at paidtwice.com have a list of surveys for fun and profit. They don't pay awesome, and most of the time I haven't qualified for them. But they only take about 10 minutes for a couple of bucks.

Tomorrow we will talk about Snowballs and how to turn your snowflakes into debt relief.
But what about you? What do you do to earn/save some extra money?

Comptence Moment of the Day- I have lost 5 inches off my waist.