Welcome to week three of the Debt Snowflake Challenge.
I have noticed that some people believe that there is no point in snowflaking money because they can’t generate hundreds of dollars to snowflake. Maybe they can only find an extra $5 to snowflake a week, so they think, what is the point?
The point is that even the small amounts add up over time, and they can save you much more in interest.
Don’t believe me? Consider this–If you took out a $200,000 mortgage for 30 years at 5.65% interest, your monthly payment would be approximately $1,155. Perhaps you want to pay this off early but can only snowflake an additional $20 a month on the payment. Why bother, you figure. What is $20 on a loan 10,000x that amount?
Well, with just that extra $20 a month, you could pay off your mortgage 15 months ahead of schedule, and you would save yourself $10,996.78 in interest. By not having to pay your mortgage for the last 15 months of the term, you save yourself $17,325 in out of pocket payments, all for just paying $20 a month ($6,900 over the life of the loan). Small amounts can make a big difference.
Our Progress
We made good progress this week, though not as much as we seem to make at the beginning of the month.
I took on a new virtual assistant job recently, and since that is extra money that we don’t technically need to make our monthly budget, I decided that all money I make from that particular job will be snowflaked.
Virtual assistant job: $91
I also designated one different, small virtual assistant job to our snowflake. I make $15 at this job per week.
Second designated virtual assistant job: $15
We did many different activities over the last week to find money to snowflake on our debt, and the result was that we were able to snowflake $106 since my last report a week ago. In the last thirteen weeks since we have gotten gazelle intense, we have “found” $5305.45 to snowflake!
{ 18 comments… read them below or add one }
Sounds like another great week! I can’t link up, is it just me? Have a great weekend. I will check back later to try again.
I’m always very impressed by your updates – you guys are definitely rocking it!
Can you explain what the whole virtual assistant thing is? I’ve watched you post about your income from it for months now but just realized that I don’t actually know what that means – what do you do?
Basically I do tasks that other bloggers are too busy to do such as submitting posts to carnivals, writing round ups featuring other bloggers, and providing giveaway advertising assistance.
Congratulations on another great week Melissa!
Nothing new for the grad school fund this week, but I did get wind of a belated Xmas present of cash from a grandparent, so I know where that’ll be going!
Also, February has an “extra” paycheck! Yay!
I used to love extra paycheck months. Sounds like you are doing great meeting your savings goal.
Wow…your example of prepaying the mortgage is powerful. Happy snowflaking!
Thanks, Julie. I am looking forward to hearing how you have been doing snowflaking too.
That is EXACTLY what I needed to hear today, Melissa. Thanks for the encouragement!
Glad it helped. It is just so important to remember that even little bits make a significant impact; do what you can and know that you are having a positive impact.
Hi Melissa,
I definitely agree that small amounts add up – whether it’s with finances, exercising or cleaning house. Inch by inch!
I’ve been wondering about your virtual assistant jobs. Have you thought of doing a post (or a series) about how you got them, your qualifications, what exactly do you do for your clients, etc. ? I’m sure I’m not the only one that’s interested in this info.
Thanks in advance!
Thanks. I will think about doing that. Right now, you can check out the post My experience as a virtual assistant: http://www.momsplans.com/2011/09/my-experience-as-a-virtual-assistant/
Yes, prepaying the mortgage really works! Years ago when we first bought our house, our escrowed taxes made our monthly payment a certain dollar amounth. At some point, our taxes actually went down a little bit, but instead of having our monthly payment adjusted accordingly, we just kept it the same, with the extra that was going toward the taxes going toward our principal. Fast forward a few years here, and we are well ahead of our 15 year payment schedule — having shaved off something like 3 years I think…?
That’s impressive! Think of all the money you are saving now that you don’t have to pay for those additional 3 years!
WOW, I knew that paying off a loan early was a great way to save on interest, but your $20/month illustration really just hit me over the head. Thanks for that!
Nice job of explaining why snowflaking actually works. It applies to more than just mortgages, too: I got rid of a five-year car loan in just 18 months by throwing every little windfall at it, even if it was just a week’s worth of loose change or a ten-dollar refund for some misbegotten purchase I returned. Every time you prepay principal on any loan, you cause more of your next payment to go toward the remaining principal and less of it to dissipate in interest.
Way to go! That is a good example of the principal that every penny counts.
Love your your home loan example Melissa, simple but effective. It still amazes me that people don’t seem to realise that even the smallest things can make a big difference in the end.
Awesome effort on all the extra earnings too, keep it up!
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