Last year about this time, I wanted to see if I could help four people – two single women and one couple – accomplish their New Year’s resolutions to save more money and get out of credit card debt.

I’m happy to report that the Color of Money Challengers – Carl and Tania Chandler, Carlesa A. Washington and Annie Schleicher – are heading into 2008 with considerably less debt then they had at the beginning of the year.

Washington, 24, started the year off with $6,402 in debt. All her consumer credit accounts were in collections. The single resident had no budget. Because she lived at home and didn’t pay rent, she spent recklessly.

Washington is now debt-free and an ardent saver.

She couldn’t stop smiling over making that last debt payment. I’m not sure she actually could believe it herself. The transformation from a young woman who didn’t even know how much she owed to someone who now watches every penny she spends was amazing.

“I have no debt,” she said giggling. “I don’t owe anyone, anything. Not a dime.”

By outward appearances, the Chandlers were doing just fine. Combined, they earn about $141,000. They own a beautiful single-family home in Maryland – with a fixed interest rate on their mortgage.

However, an inside look at their finances showed something more troubling. They had $14,400 in credit card debt and no savings – none. If they had the slightest disruption in income, they could not meet all their household expenses for even one month.

“We talk about doing better, but it’s just that, talk,” Tania wrote last year asking to participate in the challenge.

Clearly they were ready to change. As with all the challengers, I immediately had them complete the following tasks:

¢ First, face the truth. That means listing all debts starting with the smallest and working toward the largest. Turns out the Chandlers didn’t owe as much as they thought.

¢ Write down all expenses. They had to pull out their checkbook, bill statements – everything. You can’t get real about your finances and begin to budget unless you are willing to acknowledge the numbers.

¢ Keep a spending journal. For at least the first month of the challenge, they all had to record every penny they spent. This is always an eye opener. People are never fully aware of how much money they spend.

¢ Create a budget.

¢ Give up using credit for the entire year. All four challengers complied.

The Chandlers don’t just talk about doing better anymore. They are doing better. They drastically cut their expenses. For example, they rarely eat out. Whereas before, they had been eating out several times a week.

In all, the couple reduced their credit card debt by 25 percent. That’s a good percentage considering they don’t have a lot of money left over after paying household expenses.

However, during the year they used some of the proceeds of a $7,000 tax refund to purchase about $3,000 worth of furniture for their family room. Despite my objections, Carl purchased a $600 PlayStation 3 console. Had the couple taken that $3,600 and applied it to their credit cards, they would have reduced that debt load by 50 percent.

Still, they have nothing to be ashamed of. If they continue to follow the plan I laid out for them, they will get rid of the credit card debt next year.

Schleicher came close to getting rid of the $4,500 she had on one credit card. She paid off about 82 percent of the debt. Schleicher would have paid it in full by year’s end but her 1992 Subaru Loyale had to be replaced.

When Schleicher, 36, wrote to me a year ago, she had no savings and was overspending mostly on going out with friends. She said she was tired of living paycheck to paycheck.

“I want to make a change,” Schleicher said. “I want to live up to my potential, financial and otherwise. I’m hoping that you can help me learn the tools to accomplish this.”

She’s got the tools now and uses them. She budgets. When her spending gets a little out of hand, she goes back to keeping a spending journal. Schleicher has made saving a key part of her financial life. As with all the challengers, I asked her to have money automatically taken out of her paycheck every time she gets paid. She and the others complied.

“I hope that my experience can show others that it is possible to make changes in their own financial lives,” she said. “Part of being independent is living within your means, getting out of debt and having savings. While I’m not there yet, I believe I’ve made a wonderful set of first steps. And I feel empowered to keep going.”