A year of financial discipline lies ahead
A year of financial discipline lies ahead

WASHINGTON — Tarek and Evibeth Bathiche are a young military couple in a heap of debt.

They both are 24-year-old Army sergeants stationed at Fort Meade, Md., and together they owe $27,600 on six credit cards.

They need a drill sergeant to force them to shape up their financial lives, and I'm going to be as tough as I can be.

The Bathiches are one of three couples participating in this year's Color of Money Military Challenge. All three bravely agreed to allow me to report on their financial situations. They've promised to follow the individual plans I've developed to help them get out of debt.

Putting your personal business out there for people to scrutinize and criticize isn't easy. But all participants said they hope their stories, struggles and triumphs will inspire other military personnel to improve their own financial lives.

The point of this challenge is not to judge or second-guess these people's choices. What I hope to do is help them change the behaviors that led them into a financial quagmire.

Poor financial planning among military families is well-documented — and it can have serious consequences. Service members experiencing severe financial problems can lose their security clearances, face sanctions or impair their career advancement.

Bad money moves could also result in a possible discharge from the military. Personal finance issues are so troubling to some members of the armed forces that it can affect U.S. military readiness, according to studies by the Defense Department and the Government Accountability Office.

Members of the military use payday loans three times as often as civilians, a Defense Department study found. With a payday loan, you borrow against a future paycheck.

On an annualized basis, the fee charged on these loans can top out at a crippling 400 to 1,000 percent.

In a 2002 report to Congress, the Navy identified an estimated $250 million in productivity and salary losses because of service members' poor financial management.

The military has created personal financial management programs to provide service members with financial literacy training and counseling to help them avoid or fix their money problems.

The Defense Department also helped design "Military Saves” ( www.militarysaves.org) to encourage service members to reduce their debts and become better money managers.

Unfortunately, many personnel don't take advantage of these military-sponsored services, fearing that word of their troubles may affect their careers, the Government Accountability Office has reported.

Tarek Bathiche said he had never really thought about how his financial worries might impact his performance. With that in mind, he said he's ready to shed the $27,600 he and his wife have racked up in credit card debt.

The couple together earn about $65,000 a year. They have a 2-year-old son, Anthony, and Evibeth is expecting their second child in June.

It's a desire to have it all that landed Kim and George Colon in trouble.

Kim, 43, is a senior master sergeant in the Air Force. She's been in the military for almost 20 years.

George is 52 and served 22 years in the Army. He now works as a contract manager for a security company.

The Colons were married last August. Despite an income of $191,000, which includes George's Army pension, they have amassed a great deal of debt.

They owe a little more than $30,000 on eight different credit accounts. Kim owes $40,000 in student loans. They have just $1,000 saved.

After I had them do a budget, they realized they had a monthly deficit of $557, meaning they were spending more than their net pay.

Then there are the Holmeses, Amber, 37 and Trenton, 38. They too have accumulated a lot of credit card debt. The couple have been married for three years and live in the District of Columbia with Amber's 16-year-old son.

Trenton is an aircraft mechanic and tech sergeant with the Air Force. Amber is a paralegal specialist with the federal government.

Together they earn about $135,000. Part of their problem is a home they need to sell. The couple bought a new home and decided to rent the house they were leaving.

But because of the current housing crisis, they couldn't command enough rent to cover the $2,800 mortgage.

They are renting the home for $1,800, leaving them with a huge deficit.

The first major step for all the couples is to cut their ties to credit. At least for the next year or until they pay off their consumer debt, they have all promised to eliminate all use of credit.

"We have tried to save before, but I always thought, what's the point, if we still have debt?” Tarek Bathiche wrote in asking to participate in the challenge. "Please help us out and teach us to be better money managers. Soon we will have two kids running around. In the job my wife and I are in, you never know if you will come back, so we would love to have everything figured out and lined up for them.”

What all the couples need to bring to this challenge is the same discipline they adhere to in the military. If they follow my rules they will end this year in great financial shape and better able to serve our country.Listen to Michelle Singletary discuss personal finance every Tuesday on NPR's "Day to Day.” To hear her reports online go to www.npr.org. Readers can write to her c/o The Washington Post, 1150 15th St., N.W., Washington, D.C. 20071. Her e-mail address is singletarym@washpost.com.

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