Congratulations on the Baby!
I usually use a Mask for something like this. I am sure there are other ways (filters) but masking works for a lot of different things like adding a water mark, or changing things in the background, etc.
Basically I would:
1) capture/create an image or duplicate the track
you can also use a black background from title creation
2) Blur that image/clip/track (blur image in photoshop)
3) Drop image/clip on time-line above the original clip.
4) click/open event pan/crop for the blurred image/clip (top track)
5) Check box for mask in lower left corner of pan/crop
6) use anchor tool on left side of pan crop
7) click anchors in circle of the portion you want masked
done.... watch clip
9) not completly covered?
10)anchor deletion tool is also on the left
11) anchors can also be moved
It can get more advanced than this by using keyframes...
Search youtube for "Vegas 8 mask"
This is how I would do it.