LJWorld.com

At the beginning of every new year, so many people promise to get their personal finances straight.

They vow to budget, save or get out of debt - or in some cases resolve to do all three. In 2007, according to a survey by Money Magazine and the market research firm ICR, 37 percent of Americans say they plan to make a financial New Year's resolution.

Unfortunately, many of those promises will go unfulfilled long before the year ends. The Money/ICR survey found that of those who have made financial resolutions in the past, only 24 percent were successful.

Why do so many people fail to keep their goals?

Research shows that they don't have a plan from the start. Or they falter because they aren't accountable to anyone. If no one is tracking their progress or pushing them to succeed, they fall back to the same bad habits that landed them in financial jeopardy in the first place.

For 2007, I've vowed to break that cycle by helping four people - two single women and one couple - achieve their financial New Year's resolutions. I'm calling this the Color of Money Challenge, and I'll be following the decisions the participants need to make to strengthen their financial lives for years to come.

These three households represent what many Americans are going through right now. They are living paycheck to paycheck. But I admire their courage in agreeing to step forward and do something about it - especially because they are doing so in the public eye.

Depressing debt

It was easy access to credit that hobbled Carlesa Washington, one of my Color of Money Challenge participants.

Nikki Kahn/Washington Post Photo

The Chandler family of Upper Marlboro, Md., faces a financial challenge that's common to many families: They don't save enough. In front are Sydney Chandler, 2, left; and Myles Chandler, 5. At back are Tania Chandler, 39, left; and Carl Chandler, 38.

"I've become depressed and disappointed," Washington said. "Like most young people, you think that it's going to disappear."

But debt doesn't disappear. It haunts you.

"I am lost as to where I should start," Washington wrote asking to be a part of this New Year's challenge. "I want to buy a home, raise a family and be debt free."

Seeking security

Then there is Annie Schleicher, a 35-year-old former high school teacher who now works as an associate editor for an online news Web site for high school students. Schleicher said she watched her homemaker mother struggle after she separated from her father. Schleicher said her mother, who died 10 years ago from a rare cancer, made her daughter promise to be a better money manager.

It was a promise she hasn't been able to keep.

"I really want to pay off my debts and create a realistic savings plan," Schleicher said. "I want to maximize my retirement. I want to stop living paycheck to paycheck. I want to be the woman my mom wanted me to be - strong and independent."

All's well : for now

Trouble saving was a common problem for all the participants. It certainly is for Tania and Carl Chandler.

From outward appearances, the Maryland couple are doing just fine. They own a large and beautiful single-family home. They have two adorable children, ages 5 and 2. They have good jobs.

However, the couple, like many others, are doing well as long as everything goes well.

But one major illness, layoff or large unexpected expense could cause their financial world to crumble.

"Our savings, or mostly lack of, isn't worth mentioning," Tania wrote. "I think about a 529 (college savings) plan for our kids, but we haven't started one. I do have a retirement account that I dip into, so that's not good. We talk about doing better, but it's just that: talk. We would love to be chosen to take this journey to better our financial situation."

Carol Guzy/Washington Post Photo

Credit card debt weighs on Carlesa A. Washington, 23, a recent college graduate who is trying to get her finances in order

A journey is exactly what this will be for the Chandlers and the other challenge participants. Although it's going to be a rough ride, they can meet all their goals by creating a plan and sticking to it.

The Color of Money Challengers

Name: Carlesa A. Washington

Age: 23

Background: Washington is single with no children. She is a recent graduate of Howard University and works as a concierge, assisting new apartment residents. She lives in Washington, D.C., with her mother.

Her financial situation: Washington earns about $32,000 a year. She has about $1,200 in savings. Her only debts include a Bally's account, which is in collections, and for which she owes $1,284; a Macy's account, also in collections, for which she owes $425; and about $4,800 on a Visa credit card, which is now closed and in collections.

Her New Year's resolution: To pay off all her debts and begin saving for a home.

Name: Annie Schleicher

Age: 35

Background: A single professional who works as an associate editor for a news Web site. The Pennsylvania native lives in the District of Columbia and has no children, no car note and owns her home.

Her financial situation: She's never had a budget. She earns about $44,000 a year. She has no savings. She eats out a lot but isn't extravagant. Her largest expense is her mortgage. Her co-op fees, garage parking and mortgage run about $900 per month. She has $10,754 in student loans. Because Schleicher had a low-paying teaching position early in her career and volunteered for the Peace Corps, she deferred her student loans. Her loan payments are now $260 a month. When things are tight financially, she relies on credit to make ends meet.

Her New Year's resolutions: To pay off the $4,500 she's carrying on her only credit card. To build up a savings cushion of at least three months of living expenses. She also wants to make a dent in her student loans. "I feel like I've been paying on it forever," she said.

Susan Biddle/Washington Post Photo

Annie Schleicher, 35, of Washington, D.C., would like to pay off her debts and start building her savings and preparing for retirement.

Name: Tania and Carl Chandler

Age: Tania is 39. Carl is 38.

Biographical info: They are married with two children living in a Maryland suburb. She is a professional school counselor. He is a systems consultant.

Their financial situation: Together they earn about $137,000. They don't have any emergency savings. She has two small retirement accounts. He just started saving for retirement. They owe $14,400 on four credit cards, although they had thought it was $12,000.

The Chandlers aren't wildly overspending. However, they do have some hefty expenses. Their mortgage and day-care costs take up about 74 percent of their net monthly pay. The bills get paid but just barely. And when they can't stretch their pay to cover everything, Tania uses credit or borrows from her retirement plan.

Their New Year's resolutions: Above all they want to have an emergency fund. "I want to look at my bank statement and see $10,000," Carl said. "I'm tired of living paycheck to paycheck," Tania said. They both want to get rid of the credit card debt. They also would like to begin saving for their children's college education.

The key to achieving a New Year's resolution is to be realistic. Right now the Chandlers can't afford to start a college fund. So I suggested they concentrate on building their savings and paying down their credit card debt.