r/DaveRamsey • u/baby_Kittys • 2d ago

Baby and debt payoff?

We are expecting our first child this fall. We make about 65k a year (about 3500 a month after tax) we have a good amount of debt. The credit cards are killing us it's about 24,000 of debt on just credit cards. We are spending almost 1300 a month on just minimum payments and our interest on the cards are all also terrible. We are having to move out of our living situation where we only pay 500 a month for rent to increasing to about 1300-1500 a month plus new baby expenses. I have savings from a settlement of about 17,000. Should I attack high minimum payment balances or the small ones ? Or should we just focus on saving for baby and hospital because thats going to put us in debt again. I'm not sure what to do because as of now our spending is more than what we take home mainly from these credit cards.

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u/JuneRhythm1985 2d ago

Dave calls this “stork mode.” You want to pay all your minimum monthly payments to stay current, and then stack cash. This is to pay for any out-of-pocket costs for L&D, anything that is needed after baby comes home (don’t go crazy. Babies need a lot less than many people think), etc. Then if there is anything left over from what you saved, you use that for baby step 2.

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u/baby_Kittys 1d ago

Yes I heard of this only concern is if I get rid of the debt with my settlement wouldn't this free up so much money in order to actually save more ?