Stage 2 - Financial Stability
Active Cash Flow > Lifestyle Cost; + Savings
Stage 2 happens once active income is greater than current lifestyle expenses, but now this person has some Runway to fall back on.
Stage 2 is a moderately comfortable place to be, you have a small buffer between you and the money cliff, but you still have no passive income and are completely reliant on your paycheck.
Many people believe that getting to Stage 2 and maxing out their retirement accounts means you are doing everything you can to be financially responsible.
Almost as if they don't know of anything past this stage...
Do not get complacent at Stage 2, there is still much to do!
The focus for the person at Stage 2 is to eliminate their debts, and begin making strategic moves to increase their Savings Rate as much as they can. House Hacking is an appropriate option for people at this stage, as well as a possible career change.
Notice that the "work 'til you're 65" life script will not get you past Stage 2.
Increase your Savings Rate