Monday, February 25, 2008

Saving and Debt Reduction: New Snowflake Strategy

So, I recently decided to try snowflaking, and it's been an interesting and "profitable" exercise. I've also decided to shift the way I snowflake.

Most snowflakers I've read about put the money strictly to their debt. I'm starting a combination of debt/savings/IRA/special mad money. Each month, the money I snowflake will randomly be assigned to one of these categories. I think I'm just going to randomize the list of where I want to apply the money, and leave it at that -- I haven't decided yet how exactly I will choose which month for which category, though I recognize that this needs to be decided in advance. When it's a "savings" month, that'll mean the snowflake will go an account such as Vacation, Home, or Emergency funds.

If you read that last paragraph closely, you'll have noticed something unusual...there will be months when I get to spend my snowflake money! Yes, you read that right!

As I've mentioned before, I think that when a super-strict budget is followed, without much (if any) leeway, it gets to be resented and/or abandoned. I also think that when raises or bonuses or other types of windfalls are received, the budget should allow for more "fun" or pocket money. So, I'm applying this principle to my snowflaking plans. This isn't going to happen often, more like once or twice this year -- though it will be a nice surprise when it does happen.

So, I think my genetic need for variety is dictating this. Though, I really like the idea of spreading the snowflake around, especially since my income can vary wildly and low income months generally mean my Vacation and Home funds are ignored. With the strategy above, I'm ensuring everything that is important to me financially is getting a little bit of the snowflake, and I'm very pleased.

Bring on the snow!

If you like the snowflaking idea, check out the recently created Snowflake Revolution website to find other snowflakers.

2 comments:

CyanSquirrel said...

You should use a random number generator to assign the categories to each month. Here, 1 = debt. 2 = savings, 3 = IRA, and 4 = mad money, and so on. Then you use a generator to assign numbers 1 through 4 across 12 "rows" (months...more like 10 rows now that it's March). Whatever number is generated for each row from 1 thru 4 is what category is assigned for that month. I just did it using http://www.graphpad.com/quickcalcs/randomN1.cfm

Good luck!

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