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Dave Says: First the Baby, or the Debt?

by | Oct. 09, 2012

Finances

Dear Dave,

My wife and I are following your plan. We want to start a family, but we’re still in debt and still owe about $8,000 on our car. Should we pay that off and fully fund our emergency fund before we think about having children?

Robert

Dear Robert,

When two people who are married and love each other very much decide it’s time to share that love with a family, then it’s time. You’ve done a great job of managing your money, setting goals and formulating a game plan, so there’s no reason to wait.

If it were me, I’d begin aggressively paying down the car now. Then, when the doctor confirms she’s pregnant, you can temporarily push the pause button on your Total Money Makeover. If you haven’t managed to pay off the car at that point, use the money you were putting toward it to build up a big cash pile of savings, and go back to regular payments on the car after the baby comes.

By doing this you really lose no ground on your get-out-of-debt plan. You’re just redirecting your resources in case you need additional money down the road. But who knows? It may take you guys a while to get pregnant. And if that happens, you could have the car paid off and plenty of opportunity to save up more before the little one arrives!

—Dave

Dave Ramsey is America’s trusted voice on money and business. He’s authored four New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover and EntreLeadership. The Dave Ramsey Show is heard by more than 5 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.
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