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We’re expecting and I’m wondering if we should hold on to savings or pay off debt?

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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 an extra cushion for those costs or if something unexpected happens?


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 of 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 Ramsey

About Dave

Dave Ramsey is CEO of Ramsey Solutions. He has authored several best-selling books, including "The Total Money Makeover." The Ramsey Show is heard by more than 16 million listeners each week on 600 radio stations and multiple digital platforms. Follow Dave on the web at and on Twitter at @DaveRamsey.