Defeat Your Debt with the Snowflake Strategy

We’ve discussed the avalanche strategy and the snowball strategy to conquer your debt. They are the most well-known concepts for debt reduction.

There is another technique, which is not quite as well known, yet can help you accelerate debt repayment: the snowflake strategy.

Here is the idea: with the debt avalanche and the debt snowball, you are using money that you have already specifically labeled as debt payoff.

With the debt snowflake, you are using any additional money to redirect toward debt repayment.

By combining as many snowflakes as possible, you slowly but surely build up more “snow” to reduce your loans.

The good news: snowflakes very nicely complement your avalanche or your snowball.

The bad news: you need a serious dose of discipline, because snowflakes disappear quickly.

If you Google “snowflake strategy”, you will read suggestions such as:

• Using coupons to save 50 cents here and there.
• Taking advantage of any and all sales.
• Saving change from your pockets, your car, your couch.
• Selling your stuff online or during a yard sale.
• Cancelling services you don’t use or could live without such as (yikes!!!) cable TV.
• Decreasing the frequency of “lifestyles” perks such as manicures or massages. 

While there is nothing wrong with these ideas, you can probably do much better by using the following “found” sources of money:

• A raise.
• A bonus.
• Profit sharing.
• A tax refund.
• Income from a side job: pet-sitting, house sitting… and yes even lawn mowing.
• Income from a second job, for example as a relief vet or an ER vet.
• Selling things that actually have value, such as old electronics, a car you don’t really need, or high-end clothes.

Any money generated goes into your snowflake pile, and is reallocated to repay your debt. When you do that, it is extremely important that you make absolutely sure that any money beyond your monthly payment is allocated to paying down your principal. If you don’t take the precaution of making sure, there is a good chance the lender will allocate it to the interest portion of your loan, which is not to your benefit.

By adding as many snowflakes as possible to your avalanche or your snowball, you will accelerate debt repayment. The more snowflakes you use, the more you can bury your debt!

Phil Zeltzman, DVM, DACVS
Meredith Jones, DVM
Co-Founders of Veterinary Financial Summit

Are you ready to conquer your financial future? Be sure to join us in September for the VFS Virtual Conference. At the conclusion of the event, not only will you have a better understanding of your financial future, you will also have created your financial plan, and become part of a Community of like-minded Veterinarians supporting one another throughout the year.