The first milestone is making sure you’re able to pay the bills.
You may not be making any progress if you have debt but you’re not going further into debt and you’re taking care of those necessities.
You have to make sure that you’re bringing enough income to make sure that your expenses are paid.
Your next goal is going to be focused on making sure that you have some stability and that means having some sort of savings.
So not only are you able to pay the bills and take care of the necessities but should an emergency happen you can manage that hiccup and it’s not going to completely throw off your budget.
You might not call this paycheck to paycheck but it’s tight. The good news, though, is you still have some buffer some flexibility.
You’re moving forward.
Now the next step I hope you’re not in it but we started our marriage off in debt. And a lot of others have as well.
Your next goal is going to be paying off those high interest and unnecessary debts.
We’ll worry about the mortgage later but for the most part, this is the phase where you’re looking at your income and your expenses and you want to have a good enough gap that you are starting to pay off your debts.
Attack them one by one. There are two main methods of doing that – you can either attack your debts based on the interest rate or based on the balance.
Both can be effective depending on your personality.
What’s more important is that you focus on your debts one at a time.
With those debts paid off, you’re giving yourselves more options.
Financial freedom is the next phase and it’s a really fun spot.
You might not be able to completely quit your job and live off of that income but you’re now in a phase where you don’t have debt taking up most your income.
Your money is now going towards paying your essentials, you have some ‘fun’ money but you also have money you’re investing.
Your money is starting to work for you.
As you’re building those investments there’s going to be a point where your investments can cover your expenses.
Many people call this financial independence, where in theory if you want you could quit your job and your bills are going to be taken care of.
When you’re financially independent, you may decide to enter the last phase which is retirement.
Believe or not, some couples find that the traditional retirement isn’t what they really want and they look at exploring other options like diving into volunteer work or starting a second career.
Elle Martinez helps families at Couple Money achieve financial freedom by sharing tips for reducing debt, increase income, and building net worth. Learn how to live on one income and have fun with the second..