Mission: Cut service members’ debt

Columnist's orders: Discipline can lead to security

George and Kim Colon, of Dumfries, Va., are among three couples with ties to the U.S. military who volunteered for the Color of Money Military Challenge. They'll be striving to reduce debt and take other steps to get their finances on more solid footing.

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 also could 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 Department of Defense and the Government Accountability Office.

This year, the Army acknowledged that suicides were up sharply among soldiers. One of the top reasons cited was financial problems.

The military has created programs in personal financial management 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. The Military Saves program, which is part of a national initiative called “America Saves,” is kicking off a nationwide campaign Sunday, to run through March 2.

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 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 has been married for three years and lives 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 out 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 out for $1,800 a month, leaving them with a huge deficit.

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

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.