We live in a world today where money is debt. Yes, you heard it right, money is nothing but debt today. This is because, earlier times, money used to be backed up by the current value of Gold in the USA. But due to rising inflation, this idea of Gold being the backing up commodity of money was scrapped.
And today, money is not backed up by anything and so you see the fluctuation in the rate of dollar every day. That is why it is called the floating money. Since, it is not backed up by anything, the only value it has is based on trust.
And so, every time a bank gives you a loan, they are not exactly using actual money backed up by something else today. They get money sanctioned from the reserve bank, while they also take the money in their accounts as just 10% of the money that they use to put out in the forms of loans. So, in a sense, whenever you take a loan from that bank, that money that you now possess never existed before you asked for it.
But once you asked for it, it became your debt. So, debt is money and our whole society functions on this debt. But still, if you are like millions of people around the world, you do not necessarily feel going about having a debt in the first place, after all debt weighs you down. And because of today’s financial instable world, it just keeps rising. And so, to counter that debt, a new method has risen. This method is called the debt snowflake method, and in this article, we will tell you all you need to learn about it.
What is the debt snowflake method?
The snowflake method is a way of paying off your debt in a way that is concentrated, small, and on an almost daily basis. This method utilizes your savings and uses them directly to pay off your credit card debt, no matter how small the payment might be. This allows the payments to build up over time and slowly begin to pay off your debts. And soon, you find yourself free of debt while saving hundreds of dollars.
This works better than just paying off your debt in large sums at the end of each month. This is because paying for large sums of money is harder than parting from small sums of money at short periods of time. And to understand further about the snowflake method, move on to the section below.
How does it work?
The snowflake method works by utilizing your daily savings and accumulation of wealth that you do in your day to day life. Imagine this, today, your plan is to go take a cab to the city, do some grocery shopping, have some lunch, and then return back home.
So, you might have made a budget for the entire schedule that you are going to follow today in advance. But when you get out of your house, instead of calling a cab, you decide to take the bus. So, you have already saved almost 90% of the money you were going to spend on the cab by buying a ticket in the bus. Later, you do your grocery shopping and decide to drop some expensive treats or pre-prepared meals and exchange them with fresh vegetables. You save some more money, and instead of having lunch in a restaurant, you decide to eat street. And then later you take the bus home again.
Now instead of putting all of the saved money in your account, you can instant apply it daily directly to the payment of your debt.
And if you use this snowflake method of paying a small amount every single day directly to your debt, you will be able to lower your interest and make bigger payments than your monthly payments. And soon you will find that all of your debt will disappear. All it needs is smart planning, and saving money daily.