Dave Ramsey Says to Press Pause on Debt Payoff in These 4 Situations

Does pausing your debt payoff efforts ever make sense?

If you have high interest debt such as credit card debt, you will likely want to focus on paying it off ASAP so you minimize the money you spend covering financing charges. This means sending extra money to your creditors to pay down your principal balance more quickly. 

In some cases, however, there are times when you may want to press pause on debt payoff efforts because there are other more pressing financial matters to deal with. Finance expert Dave Ramsey has outlined some of these situations. Here are four of them.

1. If you're about to add to your family

Ramsey suggests pausing on extra debt payments if you are about to add a new bundle of joy to your family. 

"For now, continue to make minimum payments on your debt, so you can pay for those expenses as they pop up and start stockpiling cash until the baby comes," the Ramsey Solutions blog reads. "Once everyone comes home from the hospital healthy and happy, restart your debt snowball."

The debt snowball is Ramsey's recommended debt-payoff approach, which involves making extra payments to your smallest debt first so you can see progress and stay motivated. Ramsey believes you should pause these extra payments when you are expecting because there's a lot of costs associated with having a baby and you need to prioritize being ready to pay them.

Ramsey is absolutely right about this. You don't want to face surprise expenses, like a longer hospital stay or an extra ultrasound or something else your baby needs, and not have the money to pay for them because you've sent it to your creditors. 

2. If you experience an unexpected job loss

Ramsey also recommends pausing extra debt payments if you experience a surprise job loss. If your income suddenly comes to an end, he advises going into "spending survival mode," which means making sure you can afford the basics and paying only the minimum payments due.

Ramsey suggests taking on as many side gigs as you can while looking for more work, not to pay extra on debt but instead to cover basic costs and avoid draining your emergency fund. Once you've found a new position, then you can start paying extra again and working toward your goal of becoming debt-free ASAP. 

3. If a health issue develops

If you or a loved one experiences a serious health issue, Ramsey recommends pausing debt payments so you can focus on paying any medical bills necessary. 

"A serious medical diagnosis can throw your family into a whirlwind of emotions," Ramsey said. "During this season, it's more important to get the care your family needs than to pay off debt."

Again, he's absolutely right here. You can always make more money to pay debt back later, and it is far more important to ensure your loved one is getting the best medical care to get better. 

4. If you are experiencing a major change in your life 

Big life changes can affect your life in major ways, so it's not a surprise Ramsey suggests pausing debt payments when you're going through a period of upheaval. Divorce is one example of the types of life changes he believes should lead to a pause in payments, and he suggests that when a big shift is happening "you don’t have to go heavy on crushing your debt."

Again, Ramsey is right about this. When your life or health status changes, that needs to be the priority. Debt payoff can wait until you're on more solid ground.