Archive for July, 2008

First and foremost, let me aplogize for the ten-day delay in posting – I honestly feel terrible about that. It’s the same lame excuse every other M.I.A. blogger tends to come up with, but let me just tell you – things have been pretty hectic around here lately.

I won’t bore you with every single detail, but I do have a bit of news that I feel obligated to share with you. I’ve spent the last week negotiating the sale of MoneyRemix. Yes, you read that correctly – after spending countless hours pouring over thousands of lines of HTML and personal finance news articles and despite the strong encouragement from friends and family, I may be offloading MoneyRemix in the coming days.

The sale was actually supposed to have been completed by now, but there is a holdup with the funding and now that I’ve had a week to sit and think about letting go of a project that I put so much effort in, I think I’m having second thoughts about the sale. Of course I don’t intend to go back on my word to the buyer, but let’s just say that if the funding doesn’t work out, I’m not going to be terribly upset.

Again, I apologize for my lack of communication. As soon as there are any noteworthy developments, you’ll be among the first to know. As always, your comments are sincerely appreciated.

I just wanted to take a minute to wish everyone a happy and safe 4th of July. Make sure to lather on that sunscreen and run like hell when you light those firecrackers!

I’m back home, in Virginia Beach, taking a much needed vacation and spending some time with friends and family who I only get to see once or twice a year. The 4th of July and the week of Christmas are the two times each year that I can completely forget about finances and the stresses of work, so you better belive I’m outside, making the most of it!

Anyhow, I’ll be back to the grind on Tuesday the 8th. Until then, I hope you have a fabulous 4th!

One of the most common excuses I hear from people who have difficulty saving money is that they simply don’t make enough to put any aside. By the time they pay the mortgage, the car loan, childcare, insurance, etc, there just isn’t any money left to put into savings. I actually used that same excuse until I discovered the unbelievable power of “snowflaking” six or seven months ago. It took me a few months to really get the snowflaking concept going, but now that I’ve been at it, I’m able to reduce my debt by $560/month…after all the bills are paid!

What is snowflaking?

Before I answer that question directly, think about the term “snowflake” for a second. What comes to mind? If you’re thinking about small, insignificant pieces of ice that melt the second they touch the ground, you’re not too far off from the norm, but you are missing something important. Snowflakes accumulate rapidly and when they do, they form a much larger and more significant entity – a snowball.

In terms of personal finance, snowflakes are extra bits of money you have left over after you’re bills are paid and any extra money you can squeeze out of your budget over time. The beauty of snowflaking is that you can literally start out with an amount as small as a few dollars each month. Over time, the minimum payments on your debts will be reduced and the money that you save on the lower payments would be considered additional snowflakes. The point of snowflaking is to accumulate enough snowflakes to eventually create a debt snowball that completely steam rolls your debt into oblivion.

How I applied the snowflaking system

Step 1: Getting the initial $300/month snowflake
When I was first beginning the snowflake system, I discovered that after the minimums on my monthly bills were paid and I cut back on any extraneous spending, I had an extra $300/month that I could start with. I have a difficult time writing large checks to repay debt, so I decided to split that into four, weekly payments of $75 which makes the pill a little easier to swallow.

Step 2: I found another $80/month snowflake
I only had to repeat step 1 a couple times before I paid my Best Buy credit card off in full which freed up another $80/month. Instead of blowing that money on eating out or purchasing clothes that I didn’t really need, I turned it into a snowflake and applied it to my debt snowball, which now stood at $380/month.

Step 3: I found yet another $80/month snowflake
At this point, I was pretty stoked about saving and repaying on my debt to the tune of nearly $400/month. I began doing some calculations and realized that I could have all of my credit cards paid off in a pretty reasonable amount of time if I just stuck with the program. Never one to be content, I decided that I could do even better, so I managed to cut another $80/month out of my budget (I nixed my gym and NetFlix memberships) which I turned into another snowflake.

Step 4: I received a raise and created a $100/month snowflake
A couple of months ago, I received a raise at work and easily created another $100/month snowflake from it. I could have gone all out and added another $50 to it, but I decided to also increase my Roth IRA contribution which was a little puny.

Snowflakes are beautiful things

All said and done, after only a few months of snowflaking, I went from saving $0/month to saving $560/month. Not in my wildest dreams did I ever think I’d have the ability to save that much money every month.

Although I’m currently using the snowflaking process to pay off my credit cards, the beautiful thing is that once I’m done repaying them, I can apply the snowflaking concept to my investments and retirement savings. Instead of making a weekly payment to Discover Card, I plan on maxing out my Roth IRA with weekly contributions and increasing my 401K contribution.

Your experience with snowflaking

Needless to say, I’m a HUGE proponent of snowflaking and I honestly feel that it’s the one method of saving that has been vital to my significant debt reduction over the last year. If any of you are currently in the process of snowflaking your debt away or accumulating additional savings using the snowflake method, please share your tips, tricks, and success stories – I’d love to hear them!

Image by: J. Star