Gældsbolden

Gældsbolden, often translated as "debt ball" or "debt snowball," is a debt reduction strategy. It involves listing all debts from smallest to largest, regardless of interest rate. The debtor then makes minimum payments on all debts except the smallest one, on which they pay as much as possible. Once the smallest debt is paid off, the amount that was being paid towards it is added to the minimum payment of the next smallest debt. This process continues, with the "snowball" of payments growing larger with each debt that is eliminated.

The primary psychological benefit of the gældsbolden method is the rapid succession of small victories. Paying off smaller debts quickly can provide a sense of accomplishment and motivation, which can be crucial for maintaining commitment to a debt reduction plan. This can be particularly helpful for individuals who feel overwhelmed by their debt load.

While the gældsbolden method is popular for its motivational aspects, it is not always the most financially efficient strategy. The "debt avalanche" method, which prioritizes debts with the highest interest rates, typically results in less interest paid over time and faster overall debt elimination from a purely mathematical perspective. However, the gældsbolden's focus on quick wins can lead to greater adherence and success for some individuals. The choice between gældsbolden and other methods often depends on personal financial situation and psychological preferences.