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Dave Says: Baby Comes First!

Dave Ramsey - August 14, 2012

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We're working through your steps to get out of debt, but our daughter may need a kidney transplant. Should we beef up our emergency fund, or keep working on the debt?

Dear Dave,

My husband and I just finished Baby Step 1, and we have our $1,000 in the bank for an emergency fund. Our daughter may have to have kidney surgery in the near future. Should we beef up our emergency fund, or move to Baby Step 2 and the debt snowball?

Noel

Dear Noel,

I know I’m the “get out of debt” guy. I want everyone to experience what life can be like when they’re debt-free and don’t have to send their paychecks out the door to creditors every month. But this little girl may need the kind of help only doctors and hospitals can provide. So, for now, let’s push the pause button on your Total Money Makeover.

If I were in your situation, I’d pile up as much cash as possible. Live on a budget that’s tighter than tight and scrape together every penny you can find. Hopefully, your baby won’t need surgery. But if that kind of thing is a possibility, the only smart thing to do is prepare for the accompanying financial hit your family will experience.

Don’t feel bad about this either, Noel. If the surgery is necessary, you guys can jump right back in and start your debt snowball after your little girl is healed. But right now, baby comes first. And if you’ve already got $1,000 saved, you’re off to a good start when it comes to handling things!

—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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