A rundown of participants in the Color of Money Military Challenge, a program to help them get out of debt and improve their financial situations throughout this year and beyond:

Challengers: Tarek and Evibeth Bathiche

Age: Both Tarek and Evibeth are 24.

Biographical Info: The Bathiches are in the military and are stationed at Fort Meade, Md. Both have served about six years and are sergeants in the Army. They have a 2-year-old son, Anthony. Evibeth is expecting their second child, a girl, in June.

Their Financial Situation: Together the couple earns about $65,000 a year. They are doing well with saving for retirement. They invest a good percentage of their income in the federal Thrift Savings Plan. Evibeth contributes 10 percent of her annual salary; Tarek, 9 percent.

Here’s my concern for this couple: They have only $1,500 in savings and owe about $27,600 on six credit cards.

The Bathiches admit that they spend too much in part because much of their housing expense is covered by the military’s basic housing allowance, which by the way is tax-free. Like other military personnel, the couple also receives a basic allowance for food, also tax-free. Because the military helps greatly with their largest expense – rent – they’ve been lulled into thinking they have more to spend than they do.

“A lot of people mistake ‘military’ for ‘millionaire,'” Tarek said joking about the many benefits that personnel receive.

They spent the last year trying to pay down $22,000 they racked up on credit cards. Tarek’s father generously offered to allow them to consolidate all of that debt onto his credit card with a low interest rate. The couple then began paying about $1,100 a month on the debt. They have gotten the balance down to $14,900.

However, with their own credit cards cleared of charges, the Bathiches got right back into trouble. They charged $12,700 worth of stuff on top of the $14,900 they already owed. The couple’s credit card debt payments almost equal the rent for their military-provided apartment.

Their New Year’s Resolutions: The Bathiches want to get rid of all their credit card debt and begin saving more of their income. They also want to start a college fund for their son and soon-to-be-born daughter.

Their Plan: With a fair amount of job security, I’m not so worried about the Bathiches having an emergency fund right now or even saving for their kids’ college education.

Instead, I want them to concentrate on getting rid of their stifling credit card debt. Fortunately with their housing allowance they have more than enough cash every month to tackle the debt. With some other budget cuts, such as reducing their $180 per month cell phone bill, they could free up at least $2,000 a month to pay down the debt.

However, to get rid of the debt by year’s end, they will have to faithfully stick to their budget.

The Bathiches will begin paying off their credit cards starting with the accounts carrying the lowest balances.

Tough Love: On my first visit, I had the Bathiches cut up all of their credit cards.

I asked Tarek to do the honors.

“I can’t do it,” he said as I passed him the scissors.

But he had to do it.

And he did, as his wife watched.

“I think it’s a good start for a big change,” Tarek said. “It’s not that we’re not disciplined. We’re used to discipline. We just need more personal (finance) discipline.”

The couple now spends only cash. They even traveled recently to Miami to see family – with no credit cards.

Had I gotten to them sooner, I would have nixed the trip. They promised this will be the last trip they take until all the credit card debt is paid off.

Name: Kim and George Colon

Age: George is 52, Kim is 43.

Biographical Info: The newlyweds live in Dumfries, Va., and have been married for about six months. They share their home with Kim’s 19-year-old daughter. George served in the Army for 22 years before retiring as sergeant first class. He now works as a contract manager for a security company in Washington, D.C. Kim is a senior master sergeant in the Air Force. She’s been in the military for almost 20 years.

Their Financial Situation: Together the couple earns $191,000. Despite their high income, they only have about $1,000 in savings.

They do, however, have three homes, including their primary residence in Virginia. George receives a pension of about $19,000 a year from his service in the Army. He has no other retirement savings. Kim has about $40,000 invested in the federal Thrift Savings Plan and another $10,000 in an IRA. Like George, she will be eligible for a pension once she retires.

My concern about this couple is their debt load. They currently owe a little over $30,000 on eight different credit accounts, including a line of credit. There’s also $40,000 in student loan debt that Kim has accumulated while working on a doctorate.

The Colon’s acquired a lot of the consumer debt after their wedding.

“My husband and I have bought a massive amount of material items since we got together, mainly for our townhome,” Kim said.

The purchases started with $2,700 for blinds, then $2,800 for a washer and dryer, then $4,000 on an entertainment center. The spending got so high that Kim siphoned $8,000 from her student loan money to pay down their American Express bill.

“I am in a constant state of stress,” Kim said.

Haunting George is an outstanding federal tax bill of $11,770 and a state tax debt of $3,368. The longer he has that debt, the more interest and penalties accrue.

Their New Year’s Resolutions: The couple desperately wants to stop living paycheck to paycheck, especially since they earn so much.

Their New Year’s resolutions are to pay off the tax debt, consumer debt and build up an emergency fund. George also wants to supplement his Army pension with more retirement savings. They also want to honeymoon in Puerto Rico as well as buy a home with a garage.

Their Plan: To say the least, there will be no honeymoon in Puerto Rico. And moving into another home, especially in the current housing market, is a very long-term goal.

Most important, they need to reassess their budget. The basic housing allowance Kim gets from the Air Force nearly covers her mortgage, so I asked why they are in so much debt.

“We have been flying on a high-speed spending roller coaster ever since we wed,” she said.

To dig themselves out of this hole, I’ve asked the Colons to redo their budget and follow it strictly. They’ve tried to budget in the past but just didn’t have the discipline to follow it.

I believe they are ready now.

“I’m just tired of owing money,” George said, looking rather weary when we reviewed their finances.

They, too, will start paying off the debt with the lowest balances. But with the interest ticking up on the tax debt, they also need to aggressively pay that down.

I also recommended George sell his 2002 BMW Z3, which is costing him $702 a month. The purchase price was a little more than $42,000. He already has a 2007 Ford Explorer Sport Trac. The monthly payment for the sport-utility vehicle is $893. That payment is so high because George rolled into the $49,256 purchase price the remaining $10,000 balance from a 2005 Mustang. That has put him upside down on that vehicle – meaning he owes more than it’s worth. It would be difficult to sell because he would have to come up with thousands in cash, which the couple doesn’t have.

He could sell the BMW for enough to pay off the loan. At the very least, selling it will free the family from that large payment, which then can be applied to their massive debt load.

He agreed to list the car for sale but is now wavering. He said he just felt in his heart that he couldn’t sell it.

As I tell all challengers, it’s your life but what do you want more, freedom or financial bondage?

Tough Love: The Colons can no longer use any credit at all.

This news was particularly tough for Kim, who likes to pay with plastic for the reward points.

“At what price are you earning those points?” I asked.

Sure, she may get some free airline tickets, but she’s taken on more debt than she can now handle. Again and again I tell people that studies show you spend more when you use credit, even if you pay off your balance every month. So those so-called reward points aren’t really free at all when it’s a sure bet you are overspending because you’re using the plastic.

I had Kim cut up the cards, including the pretty translucent blue American Express charge card. She hesitated at first.

“It’s just hard,” she said. “What am I going to do if an emergency happens? What if I need it for a car repair?”

I reached into my purse and pulled out a $20 bill. I handed it to Kim. I asked her to look at it, feel it. Far too many people have forgotten what’s it’s like to pay for what they want or need with cash. As I have told many people in the same predicament as the Colons, a credit card shouldn’t be your financial lifeline.

Name: Amber and Trenton Holmes

Age: Amber is 37, Trenton’s 38.

Biographical Info: The couple has been married for three years and lives in Washington, D.C., with Amber’s 16-year-old son. Trenton is an aircraft mechanic with the Air Force. He has a dual status as both a civilian and reservist. He currently has the rank of tech sergeant and has been in the Air Force Reserve for 18 years. He works on Andrews Air Force Base. Amber is a paralegal specialist with the federal government.

Their Financial Situation: The two earn roughly $135,000. Amber earns additional income working part-time as a makeup artist. When on reservist duty, Trenton’s income is bumped up. This year alone he will earn an additional $10,000, he said.

The Holmeses are trying to play catch up with their retirement savings so they have a lot of income going into the federal Thrift Savings Plan. Amber contributes 12 percent of her income; Trenton, 15 percent.

Unfortunately, the rest of their financial picture is very troubling.

First, they have two homes in the District with huge mortgages. Last year, they moved into a new home, deciding to keep the old house. The problem is they couldn’t rent the first house for enough money to cover its $2,800 mortgage. After ten months of the house sitting vacant, they finally found someone willing to pay $1,800 a month in rent. However, that means they have to ante up $1,000 every month to make that mortgage payment.

On top of that, they have about $20,000 in loans from their Thrift Savings Plan. They owe another $12,990 that is divided between six credit cards and two lines of credit. They owe about $28,220 on a home equity loan for one of the homes. And Amber has about $55,000 in undergraduate student loan debt.

Their New Year’s Resolutions: The couple wants to get out from under a pile of debt that has decimated their financial situation and their spirits.

“We do not want to drown in debt,” Amber said.

Their Plan: The Holmeses need to do something fast to avoid a financial catastrophe. The fact is they have been using borrowed money to meet their monthly obligations.

First, they need to cut their expenses. Every month they spend $226 on cable and another $250 on cell phones alone. Although they need to save for retirement, I recommended they cut back on their contributions to their Thrift Savings Plan. Right now the priority has to be throwing as money at their debts as possible, especially since their net pay isn’t covering all their expenses.

The plan is to prioritize the debt starting with the accounts with the lowest balances. They have credit cards with just $300 or $400 outstanding that they should just knock out. When you are in this kind of debt stretched over multiple accounts there’s a psychological boost to getting rid of as many balances as possible. You see immediate progress and that helps you stay on track.

Tough Love: Like all the challengers this year, the very first thing I had them do was destroy every piece of plastic in their possession. They can only spend cash now. At this point, there’s no other way for them.

Amber is the spender in the family so I had her cut up the credit cards.

Trenton has to let go of some of his favorite fun things to do, such as golfing. He’s also attached to his cable sports package. I urged the couple to avoid any unnecessary spending. That means canceling a planned trip to Puerto Rico this fall.

They’ve got to rein in their spending. They just can’t keep going month after month spending more then they bring in.