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I’ve been thinking about this question for a several weeks now. PaidTwice has started the Snowflake Revolution, which is a aggregation of blogs that talk about snowflaking. I’ve been looking for an excuse to join, but I’ve not really been sure if the concepts apply to me since I don’t have any debt.

In case you are unfamiliar, the term ‘Snowball’ refers to Dave Ramsey’s recommendation to make minimum payments on all of your debts except one. You then focus all of your available money on paying off that one debt. After eliminating the first one, you take the money that you were paying to it, and attack your next debt. As each debt is paid off, your ’snowball’ gets bigger and bigger, making it easier and quicker to pay off the other debts.

The concept of ‘Snowflaking‘ is an extension of the debt snowball. The idea is make payments immediately (or at least as quickly as possible) towards reducing your debt. Instead of accumulating your extra money in your checking account and sending it once a month with your regular payment, you make payments towards your debt, as soon you earn the money. Sell something on eBay? Make a payment towards your debt. Earn some extra money from a side job? Send off a payment towards your debt. You get the idea.

I believe that it snowflaking a powerful idea and would like to find some way to use it in my own financial situation. It eliminates the temporary excess cash in your regular spending account, meaning that you can’t spend it on things not in your budget . It is effectively the modern-day version of avoiding money that is ‘burning a hole in your pocket’. In our world of instant gratification, the frequent payments help us to see that progress is being made and provide motivation to continue.

Now, the question I have is if Snowflaking and Snowballing can be applied you are out of debt. The debt snowball is traditionally targeted at eliminating debts. To apply the snowball concept to things other than debts, you would invest your extra money into retirement, education, and general interest-earning accounts in order of either interest rate or importance.

These types of accounts are those to which I would normally have a fixed, monthly deposit. I might put $200 per month into a Roth IRA, and $100/month into a 529 College Savings account. A purist would say to not make any automatic monthly payments towards these accounts and would, instead, focus on funding one at a time until you reach either a legal or budgeted limit.

An alternative to the purist view would be to keep the monthly contributions going, but to really consider what the minimum amount for those automatic transfers are, and to make them as small as possible. You could then still focus your extra money each month towards your chosen savings account until you have reached your limit minus the sum of the remaining the automatic payments for the year. I personally like this method better, knowing that I’m contributing at least something to each of my investment-type accounts.

Snowflaking to a investment-type account might be a challenge in some circumstances. In know that it is more difficult for me to enter investment transactions into Quicken than for a checking or savings account. All of the small transactions would be a pain for bookkeeping and would negate any incentive for me to do it. My solution for that is to use a high yield savings account to temporarily hold my snowflaking payments until I can deposit them monthly to my investment account.

Using these methods, I’m hoping to increase the amount of money that I save each month and investing it where it makes the most sense for me.