Here Comes Baby: Beating Debt Before Jr. Comes Along

Are you considering taking the next step in life by adding a bundle of joy to your family? For the sake of your family, it’s smart to get your finances in order first. This involves beating debt before junior comes along so you can pad your emergency fund and handle the unexpected expenses associated with raising a child in our modern world.


The Cost of Raising a Child

Adding a child to your family will undoubtedly bring plenty of excitement and joy. But it’s important to consider the financial implications, too. As USA Today reports, the U.S. Department of Agriculture estimates that it costs a middle-income family $233,601 to raise a child today. While the specifics will vary depending on lifestyle factors, the takeaway is that children tend to be expensive. The only way to optimize your finances ahead of time is to acknowledge this fact and act accordingly before the big day.


Your budget will change drastically before your child is even born. Some of your income will need to go toward buying essentials like clothing, toys, furniture, diapers, food and more. You’ll also need to consider the cost of childcare—a regular expense that often costs families hundreds or thousands of dollars per month.


Furthermore, your emergency fund will become more important than ever because it must extend to protect your newest family member. What if your little one runs a dangerous fever in the middle of the night and needs urgent care? What if you suddenly lose your job soon after the arrival of your baby? Without enough money stashed away for emergencies, you may be forced to accrue debt on your credit card. Many experts recommend having at least six months’ worth of living expenses stashed away to cover unexpected emergencies as they arise.


Strategies for Eliminating Debt

Debt can be a hurdle that stands between parents and comfortably providing for a new baby. If you’re carrying any outstanding balances, it’s best to address them before adding the financial responsibilities of a child into the mix. Consider these possible strategies for beating debt:


  • Balance Transfer: If high interest rates on your credit card statements are getting you down, consider transferring your balance to a card with low or no interest. Conducting a balance transfer costs a small fee, but may potentially save you more in interest.


  • Debt Settlement: Working with an organization like Freedom Debt Relief, consumers contribute money to a dedicated account for a set period of time. Professional negotiators then reach out on behalf of clients to creditors, attempting to reach a settlement deal for less than the debt originally owed. This strategy is an option for people with $7,500 or more in unsecured debt—like credit card and medical bills.


  • Debt Consolidation: People juggling multiple debts can sometimes streamline by consolidating debts into a single monthly payment. This tactic involves taking out a personal loan to pay back debts, then paying back the fixed-rate loan over time.


  • DIY Debt Relief: Some consumers are able to tackle debt by tightening their purse strings and putting extra money toward aggressively paying down debts. It helps to focus primarily on one debt at a time to stay motivated.


Proactively addressing debt before the birth of your baby will help you focus on what’s truly important. Sleepless nights with a newborn are well worth it for all the love you will experience in your baby’s lifetime—but sleepless nights with your pocketbook, an Excel spreadsheet and debt collection notices? Not so much.


The best thing you can do for your growing family is get your finances squared away before you’re on diaper duty.


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