We Are Having a Baby! Should We Stop Investing and Save?

Brett and his wife are expecting their first child. They've stopped their debt snowball to stockpile money. Should they begin contributing to their 401(k)s up to the employer match or continue to hold off?

QUESTION: Brett in West Virginia and his wife are expecting their first child. They’ve stopped their debt snowball to stockpile money. Should they begin contributing to their 401(k)s up to the employer match or continue to hold off?

ANSWER: The purpose of you stopping the extra pay on the debt is so that you have extra cash in case something happened during the pregnancy, right? And you’re asking me if you should put that in a 401(k)?

No. It kind of defeats the purpose. The only reason we’re stopping the debt snowball temporarily is to pile up cash in case something occurs during the pregnancy at all that you need some money. Then as soon as Mommy and baby come home from the hospital safe, we take all the cash we piled up and throw it at the debt snowball, so really no ground was lost but we created an emergency fund in the meantime just to make sure everything is okay during the pregnancy. So you push pause during the pregnancy on your debt snowball, but if you turn around and put any of that money into your 401(k) instead, the money’s still trapped. You don’t have the money.

So, no, the whole idea is to have some money in case you need some in that situation, and that defeats the purpose.