There are several approaches that we can use to pay off our debts, you can either prioritize paying those with a high APR or focus on the smallest amount first, however for each to be effective you need effective budgeting. You need to learn how to minimize your spending, cut on costs, gain some savings and use them to clear your debt.
This is what we call the snowflake method. You may have made your budget and found that the amount left for debt payment will not be enough. You may have tried to squeeze more out of your budget but this seems impossible since all expenses are important and cannot be done away with. All is not lost as the snowflake method will help you get more out of you budget and eventually diminish your debt. The snowflake method does not replace other approaches for clearing debt but rather it’s a strategy that helps you find much needed money.
The snowflake method involves shaving off some money from your daily spending or getting some extra pocket change and using it to clear the debt in small portions. You use the found money to make small, regular payments on your account.
The amount may be small in relation to the amount owed but over time the little payments accumulate to a large amount which will have a bearing on your debt and credit rating. When utilized with other repayment methods you will be able to repay your debt more efficiently.
This is how the strategy works; you may have set aside a certain amount of money for groceries, say $100 per week. You use your creativity to ensure that you find groceries which are selling at slightly lower prices.
You can buy directly from the farmers market instead of your local grocer or super market. You will find that the products are cheaper here than in your usual purchasing point. You may be lucky to save $30-40 per week, use the amount to clear part of the debt.
When you do this every week, small savings will have added to a figure of between $120- 160 per month and between $1200- 2000 per year. The small amount that you have saved on groceries when combined with other savings will make up a substantial amount. For example; using coupons or earning loyalty points can go towards repayment of debt, further helping in reducing the amount owed. Get creative and think of more, simple ways to save a little bit of money here and there. Using this method, it won’t be long before you clear all the debt.
Disclaimer: The above information is general in nature and not intended to be financial advice. You should consider seeking professional advice before following any suggestions in this blog/website.