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How to pay off your loans using the 'debt snowflake' method

Snowflake-sized savings helped Kat Tretina pay off an avalanche of debt.
Image: Money jar
The debt snowflake method focuses on very, very small amounts to pay off debt faster. Syda Productions / Shutterstock

If you’re one of millions of Americans struggling to pay off loans, the “debt snowflake” method can help you save big by saving small.

Student Loan Hero writer Kat Tretina says she used the method to pay off $35,000 in student loans four years early.

“The debt snowflake focuses on very, very small amounts,” Tretina tells NBC News BETTER. “Like a dollar or two even at a time that will help you pay off your debt a lot faster.”

While strategies like the “wealth snowball” can be effective for paying off debt, they require you to pay more than what is owed on your minimum monthly balance, and that can be expensive, Tretina says.

But with the snowflake method, you apply small savings directly to your debt every day, which adds up over time, she says.

For example, let’s say you have a credit card balance of $5,000 with an APR of 15 percent and your minimum payment is $150. It will take you over three and a half years to pay if off, and $1,509 will go to interest.

But if you start saving just $5 a week grocery shopping with coupons and you applied that extra $20 a month to paying off your credit card, your repayment would take about 3 years and you would pay only $1,272 in interest.

“With that you could actually save a significant amount of money,” explains Tretina.

Tretina stresses that the snowflake method is not a replacement to other strategies like the wealth snowball — it’s just a useful way to help you find extra money. How you use the savings to pay off your loans is up to you, she says.

“Just a tiny bit of extra savings can actually have a huge payoff,” she says.

This debt calculator can help you see how adding small amounts to your monthly payment can pay off your loans faster.

Small ways you can save

To save in small ways, Tretina ditched cable and money-eating subscriptions like Netflix and Amazon.

“The money I spent on cable, I automatically applied that to my loans,” she says.

She also used coupons when she went grocery shopping and cooked most of her meals at home, which allows her to add about $60 to her monthly payments.

“I started doing batch cooking on the weekends,” she says. “So that way I would have my lunch and dinner for the week, and wouldn’t have to worry about spending more money on groceries. So that freed up an extra $15 a week that I would apply to my loans.”

Tretina also made extra money through side hustles like pet sitting and online surveys that paid $5 per survey.

“None of them were bringing in tons of money a month, but even those little bits helped me pay off those loans so far ahead of schedule,” she says.

As soon as you save it, repay it

At the end of each day, Tretina would calculate the money she saved and apply that amount directly to repaying her loans.

For example, if she calculated saving $4 on groceries on a particular day, she would transfer $4 from her online bank account towards her loan payment.

“My policy was I wanted to put that money towards the debt as soon as I got it so that way I wouldn’t be tempted to find another use for it,” she explains.

Stay motivated by tracking your payments

When you are saving tiny amounts each day, it can be hard to see their impact. To keep yourself motivated, you can track the amount of money you’ve paid off in a spreadsheet, for example, or anything that works for you.

Tretina kept herself motivated by pinning a large picture of a thermometer to her wall. Every time she paid off $50 worth of loans, she would shade in a section.

“Just seeing that as things went by helped keep me motivated,” she says.

Invest your savings

Now that Tretina has paid off her debt, she invests her savings in mutual funds and ETFs through online investment management tools like Betterment. The writer says repaying her loans with the debt snowflake method changed her attitude about money.

“I used to be a lot more open to debt — like thinking of debt as good debt, especially with education loans,” Tretina says.

“Now I’m so debt adverse,” Tretina says. “It just makes me feel like I have more freedom.”

How to pay off your debts using the debt snowflake approach

  • Small amounts add up: With the debt snowflake method, you apply small savings directly to your debt every day, which adds up over time. Cutting back on expensive subscriptions, using coupons, and batch cooking your meals all examples of how you can cut back in small ways.
  • Repay it as soon as you save it. Calculate the amount of money you saved each day and apply it directly from an online savings account to your debt.
  • Implement a tracking system. It can be difficult to see the impact of small, incremental savings. Tracking the amount you save each day in a spread sheet can help you visualize the amount you’ve saved and keep you motivated.
  • Invest what you've saved. Once you’ve paid off your debt, contribute your savings to an investment tool like an IRA that will help you increase your wealth.

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