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Dave Ramsey is America's trusted voice on money and business, and CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 12 million listeners each week on 575 radio stations and multiple digital platforms. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com. |
Babies are not that expensive, but it may make sense to put a pause on your plans for paying down debt until you have a firm grasp on your new budget. And Baby Makes Three Dear Dave, My wife and I are expecting our first child in a couple of weeks. I bring home $35,000 a year teaching at a local high school, and she just completed her master’s degree in speech therapy. She has a job waiting for her after the baby is born, and they are being very flexible about when she starts. I have heard you tell some people to leave just $1000 in savings for Baby Step 1, and use any other saved cash to pay off debt. But I am concerned about the new expenses we will have once the baby is home. Should we hang on to our savings, so we have extra cushion for those costs or if something unexpected happens? David Dear David, Congratulations! I know you two are excited to welcome a little one into the world. In your situation, I’d advise pushing the pause button on the Baby Steps for now. Forget about paying down debt, until mom and the baby come home, and you’re sure everyone’s healthy and safe. You could even hang on to it all until she decides to start work. But the bottom line is if everybody’s okay, the baby and all those connected expenses—like formula, diapers, and daycare—just become part of a regular monthly budget. Your wife is going to be making pretty good money once she starts her job. And the truth is babies are not all that expensive. There are costs involved in having kids, but it’s not like we’re talking thousands of dollars a month out of your budget just because you had a baby. Can you buy lots and lots of things for a baby? Can those things cost a ridiculous amount of money? Of course! The list of things you could buy goes on and on. But a healthy, new baby doesn’t need much, and having one at home isn’t going to break the bank. I think any financial fear or uncertainty you may be experiencing right now will disappear once you’ve got a couple months of adjusting your budget and getting used to the new normal under your belt. Then, when you and your wife decide it’s time to start her career, you can begin paying off debt in a really big way!- Dave |
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