4/04/2008

What is: Debt-Snowflaking?

It was late last year when I ran across this post on the Consumerist. "The Best Personal Finance Ideas of The year". Could be interesting - but are they really new ideas? I was definitely pulled in when I saw that the top pick was the concept of the debt-snowflake. So what is debt-snowflaking?

Chris Walters, from the Consumerist, summarized it as "the act of finding lots of little ways to supplement your standard income, so that you can add mass to your "debt snowball" to make it more effective." That sounded awfully familiar, but I thought it would be worth a read to get a better feel for the concept.

The I've Paid For This Twice Already blog is credited with popularizing the concept and even offers a primer on the topic. Its a simple concept and a good one. Not so sure about the "new" part.

Nearly four years ago, we were introduced to Dave Ramsey and his personal finance advice. We got on the ball, on a plan, and almost two years ago, we completed our debt-snowball. We read Dave's books, listened to his radio show as often as we could, attended a Live! event, and even taught FPU for a while. It was pretty safe to say that we were in-tune with his message and engaged in his method. Those unfamiliar with Dave are quick to associate him with the debt-snowball, or paying off debt, or cutting up credit cards in dramatic fashion. Those are all correct, but that is only a small part of the picture. If you don't read the books or take the class or listen to the radio show - a lot - then you are missing quite a bit.

I had mostly forgot about snowflaking until March of this year, when I started seeing more about it. More and more people blogging about snowflaking. The Austin-American Statesman even picked up on it. Then I find that paidtwice has even spun it of into it's own site. People are getting excited about snowflaking and some are actually doing it. It's a pretty cool thing when you can have a positive affect on someone else's financial future.

To paidtwice's credit, she is admittedly unfamiliar with a lot of Dave's teachings and have not read his books. Thats ok. But, Gazelle Intensity, one of Dave's terms, is not a "role play". It's a mindset. It is a way of life. On Dave's plan, it becomes your modus operandi when you are getting out of debt. Gather Little By Little has it right - the gazelle is not about speed, but rather direction. Running 100 mph in the wrong direction will not get you to your goal. The other part of the phrase, Intensity, can best be summed up when Dave talks about it in reference to.... the debt-snowball. You'll hear stuff like, "Get an extra job, or three." "Put the dog on ebay." "Sell so much stuff, the kids think they're next." His take on the debt-snowball is usually accurately represented as listing your debts smallest to largest and paying minimum payments on all but the smallest. But the part people often forget - or just don't know about - is the most important. You attack the smallest debt with gazelle intensity. You scrape together every dollar you can get your hands on and throw it at that smallest debt until you knock it out. Sound familiar?

They did at least give it a fun name in 'snowflaking'. But really - who cares what you call it? What is really important is that people are doing this. I'll give kudos to paidtwice, as she has found a way to get people excited about paying off debt and has been quite successful in getting the message out. Dave Ramsey often admits, "I didn't invent this stuff, I just found a good way to package it."

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2 comments:

paidtwice said...

If you read my primer, I don't claim to have invented the concept. I credit where I got it from originally. I just like snowflaking and talk about it a lot. :)

(not) the Jet Set said...

paidtwice-

I tried to choose my words carefully. "The I've Paid For This Twice Already blog is credited with the concept and even offers a primer on the topic." In all of my research, everything pointed back to your blogs. Not a bad thing, btw. Maybe I missed something.

Also, I re-read your primer, and I do see the iVillage link at the end. If you'd like, I'll revise the article.

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