Charting Their Rise Out of Debt

While the government tries to figure out how to bail out Wall Street, I've been working this year on ways to bail out three military families from debt that was crushing their spirits.

These families -- unlike many major institutions -- didn't wait for a handout. Instead, they cut their expenses, ended their addiction to credit, and took responsibility for their poor money-management decisions.

The couples agreed to participate in this year's Color of Money Military Challenge and to expose their financial situations in exchange for help with their money woes. They are in many respects prime examples of the people at the core of the current financial crisis. They represent many Americans who haven't saved much -- if anything at all. They overused credit, racking up thousands of dollars in charges they had to roll over month to month. One family got caught in the housing downturn and stuck with a mortgage they couldn't afford.

They all let their spending get out of control.

But had these couples not begun to rein in their spending and aggressively pay off their consumer debt at the beginning of the year, they would be having a particularly tough time now dealing with the rise in food and gas prices.

Tarek and Evibeth Bathiche, both Army personnel stationed at Fort Meade, started the challenge with $27,600 on six credit cards. They have just $6,500 left to pay off.

"When we wanted something, we wanted it, and if we could make payments later, all the better," Tarek Bathiche said. "We are the typical American family because we are looking to buy a house, but we can't because of debt. And once we are out of debt, it will still be hard to buy a home with the way everything is going now."

Amber and Trenton Holmes are feeling what many home sellers are feeling right now. For more than a year, they have been stuck with a second home they've been unable to rent out for enough money to cover the mortgage and taxes. They also have been unable to sell it at a price high enough to pay off the mortgage.

They are not alone. Existing-home sales dropped 2.2 percent in August compared with July, according to the National Association of Realtors. The price people could get for their homes in many areas also continued to decline. The median sales price of existing homes sold in August was $203,100, down 9.5 percent from $224,400 a year ago.

Amber Holmes said that when the couple decided to upgrade to a larger home in the District, they planned to keep their first home as an investment property. They figured that the way housing prices were rising, they wouldn't have any trouble selling or renting the house.

They were wrong.

When they were finally able to rent the house out after 10 months, they still had to kick in $1,000 a month to cover the costs.