I'm assuming the guy saves up a bit before he applies it towards a debt. Spending 42 cents on a stamp to mail out couch change is probably not the way the program is meant to work.

@Blueskylaw: Well you could make small payments with a 0% credit card and just save that $0.42 for when the 0% card is due. Of course, you would pay off the 0% card at the end of the month.

@Blueskylaw: He could deposit his couch change into his bank account and pay online. No need to pay postage that way.

@Blueskylaw: Who pays bills using snail mail these days?

I did something like this recently. The problem is most credit card companies only allow you to make 4 payments a month.

@thebigbad:
I use snail mail for my CC bill. I write at most 3 checks a month and my money market account pays a good yield but does not allow me to pay bills online. It is not my best financial interest to have a checking account that pays next to nothing when I can get a higher yield with my money market account.

I think the debt snowball idea is better. If he would put extra penny into solving his debt he would be out of debt quicker. I think this is some fuzzy accounting that can only work if the CC companies continue to give out 0 % credit cards.

I use a variation of the snowflake system, I suppose. I split my paycheck up - a portion into savings, a portion into checking. My checking account pays for every bill/meal/entertainment and at the end of the pay cycle any extra cash immediately goes toward a bill of my choice.

This is really nice because not only have I built up a comfortable emergency fund (I usually get ~250 dollars every other week in there) but I also pay off bills quickly without dipping into it!

@TEW: why do people call them this? That's an intro period, and these is probably a 3% fee to transfer a balance.

Sorry, this is a Ramsey idea warmed over and called a snowflake. He pushes the idea of selling stuff, having yard sales, using any extra money to pay down debt, etc. in addition to the snowball. Just listen to his show for five minutes and he'll ask every caller trying to get out of debt what they can sell...

@semiquaver:

I make at LEAST 4 every month to my Chase card, and they have never once refused to take my money.

I realized you said 'most' and not 'all'. Just throwing my anecdotal evidence into your argument.

BTW. I started the snowball method last year. My wife and I paid off my car 2 years early, and we'll have her car paid off by the end of the year. Then it's onto the home equity loan we took out to finish our basement, which once both of our car payments get added to it, we'll have knocked out in another 18 months.

There really is merit to the system, if only for the milestones you can celebrate. It's no longer a journey with a finish line you can't see. The incremental goals that are within a year or so are easier to work for.

Also, you really see how much in interest you are paying. I really want to pay cash for any new vehicles in the future now.

@semiquaver: No snark intended, but what do those other companies do when you send them payment 5? "No, thank you, you've given us enough money this month kind Sir! Come back after the first."
What I could see them doing is holding the payment and refusing to apply it until after the month rolls.
I know most payment forms won't let you put in an amount less than a dollar, so I assume the snowflakes are at least that size in this case.

@TEW: Actually it would help to do a bunch of small payments since it's reducing the daily amount that gets compounded. The problem is that while you're sending in the little payments, you're still on the hook for a larger payment at the end of the month.
I had an extra bit of cash I was able to use towards my debt and I decided that it was best to throw it towards my car loan since that advanced my next due payment by 3 months. This free'd up the amount I would normally send to them to snowball towards my credit cards. Had I just sent it to the cards I would have done that and STILL had to send money to the car and the credit cards that month.

I don't know for sure that that was the best route, but psychologically it was a win for me.

I think this guy must be single. Every extra bit of money I get, find, etc, my wife thinks means "oh, spending money".

@menty666:
Thats what my wife and I did...We were close to paying off the car and the 200+ a month payment was just a drain at that point, so we took a month and threw all the extra we had at paying off the bill. Although it was a low rate, it took up an large portion of usable funds. This gave us a victory in paying off a bill and getting an "extra" 200 to toss at the cards. We are saving our "big" tab for last, because it feels so much easier to stick to the plan when you start getting the zero balance statements.

I prefer the "Bat out of Hell" method.. (Chapter 7)

hehehehe :)

I've been flaking at my credit card bill for a few months now. Partly because I'm scared my credit union will reduce my credit limit, and partly because if I put the money toward my credit card, I can't spend it on more crap I don't need.

@menty666: Holding and applying next month seems to make the most sense.

But an honest question -- what benefit is there to paying 4-5 times in a given month? You don't save any money in accrued interest versus making one payment at the end of the billing cycle. If anything, it costs you more time, effort, and money to make those extra payments.

Y'all aren't regular readers of HER blog, but if you were you'd know that Snowflaking is only a part of her debt paydown plan. She also does a variation of snowballing - she just uses every snowflake to help her snowballs keep momentum.

And she doesn't spend 42 cents to mail out $1 in snowflakes. She isn't an idiot.

In fact, she's paid off 3 of her 4 outstanding debts; a hair under 75% of all non-mortgage debt in under two years.

And she's inspired and helped a lot of other people to do the same.

Her blog is incredibly interesting, not just because of her snowflaking ideas, but because she tries each idea and reports back on her success/failure and why.

She's also pretty open about major life changes and how they can toss your plans off track. She's recently dealt with some the loss of her father and the additional expenses caused by unexpected travel due to that death have pretty much wiped out her forward momentum for the last few months.

Snowflaking and snowballing work together like diet and exercise. You can probably get by on one alone but it's easier if you use both :D

@Saboth: I think that's the whole point of the snowflake system, it's to re-train people who don't have the financial discipline to put small amounts of money into a kitty for paying off a bill at the end of the month.

@supercereal: I think the benefit is for people that have a tough time with their budget. It's a lot harder to sit on an extra $50 for a month than to write out a check and have it out of your hands. For budget-conscious and restrained consumers, this is likely no help.

@Saboth: We almost took advantage of Target's Buy 1 Blu-Ray and Get One Free Deal...except you had to buy one from a list they had, and the free one could only also come from the same list. We dropped those like hot potatoes and left. Saved us $30!

@supercereal: Yes, you won't save much money in sending in multiple payments, but the benefit to snowflakers the immediacy of paying down the debt. And by making multiple small payments, it removes the temptation to spend that found money on anything other than the debt...

@cunnij98: These days if you listen to Ramsey for five minutes odds are all you are going to hear is him whining about the Obama administration.

Suzy would not approve.

@TorrentFreak: Why would you need to use a 0% card if you pay it off at the end of the month?

@EllaMcWho:

I ran into the same problem (CC limited me to X number of payments per month) but fixed that problem by pushing the payments from my bank account via bill pay rather than letting the CC pull them from my account.

Why snowflake, if you are really focused on killing your debt you want to keep up the motivation so any little bit of money that you find, save, earn goes to kill the debt.

This of cours ehinges on your ability to NOT SPEND your extra money, and then some. A problem I tend to be guilty of. But I will say in my defense I had 15k in 2007 and now I have 6.5k. I've come pretty far.

@EllaMcWho: @docrice: Ah, that makes sense. Sounds very Dave Ramsey-ish, but a good idea nonetheless to lower the temptation of spending the extra cash.

@supercereal: Some cards use average monthly balance to calculate interest amounts, so paying down early in the month reduces your average and therefore your interest paid.

@sean98125:

I can't remember Ramsey ever singling out Obama. He's an equal opportunity politician-blaster.

@supercereal:
"what benefit is there to paying 4-5 times in a given month?"

I use my card for almost everything now, including gas, eating out, random Target runs, etc. I track my budget on a spreadsheet.

At least once a week, I log on and pay off all I have charged, then deduct the amount from my spreadsheet. I then know exactly how much I have left in my spending budget.

If I tried to just log on monthly, I could end up spending more than I budget.

Could I just deduct the money from the spreadsheet as I spend it, instead of when I pay it? Sure. But:

-I'd still log into my credit card account a couple of times a week to make sure I have logged each transaction, so it's not much more work to just pay it while I'm there.

-I'd then have to track each transaction on my spreadsheet, instead of the payment that covers several.

The secret to paying off debt:

Make money, then pay it to the people you owe.

It's an easy system that has yet to fail me. With only four easy steps, anyone can succeed!

Step one: Income. I suggest a job, usually.
Step two: Eat.
Step three: Pay your debts. Preferably in whatever order saves you the most money.
Step four: Give any money you make after this point to anyone else (the exception being the government). Because honestly, if you couldn't figure out the way to get rid of your debts is to just pay the things off, you're probably going to throw yourself right back into the snake pit.

How do you make over a 100,000 dollars a year and still manage to not have money? I just don't understand it.

@Spectre1125:

I so wish I made over 100k a year...

Anybody heard of saving their $ and only buying something when you have the $ to pay for it?

My snowflake money goes into my fast food budget. So I suppose I should be reading the obesity and terrorism topic instead..

@cunnij98: selling everything does.not.work.when.no.one.is.buying!

doesn't work well when rates continually jack up & jobs get lost either.

@thebluepill: hey, it's better than the writhing in hell method (Ch13)

@supercereal: Not so much a reason as an example...

A friend of mine logs on to each of his financial accounts every morning, checks all new transactions, and pays for all new charges. Kind of excessive, but he started the habit after someone stole his CC number.