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Military Families Seek Help With Debt

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By MICHELLE SINGLETARY Washington Post Writer's Group

Published: February 24, 2008

Tarek and Evibeth Bathiche are a young military couple in a heap of debt.

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 in this year's Color of Money Military Challenge. All three bravely agreed to allow me to report on their finances. 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 isn't easy. But all participants said they hope their stories, struggles and triumphs will inspire other military personnel to improve their financial lives.
Money Problems Reported

Poor financial planning among military families is well documented - and it can have serious consequences. Service personnel experiencing severe financial problems can lose their security clearances, face sanctions or impair their career advancement. Bad money moves could also result in a possible discharge.

Members of the military use payday loans three times as often as civilians, a Defense Department study found. With a payday loan, you borrow against a future paycheck. Congress was so concerned about payday loan use by military personnel that it capped the annual percentage rate for service men and women at 36 percent. On an annualized basis, the fee charged on these loans can top out at a crippling 400 percent to 1,000 percent.

In a 2002 report to Congress, the Navy identified an estimated $250 million in productivity and salary losses due to service members' poor financial management.

The military has created personal financial management programs to provide personnel with financial literacy training and counseling to help them avoid or fix money problems.

Unfortunately, many don't take advantage, fearing that word of their troubles may affect their careers, the Government Accountability Office has reported.

Tarek Bathiche said he's ready to shed the $27,600 he and his wife have racked up in credit card debt. The couple together earns about $65,000 a year. They have a 2-year-old son, Anthony, and Evibeth is expecting in June.

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.

Despite an income of $191,000, 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.

Huge Debt And 2 Mortgages

Then there are the Holmeses, Amber, 37 and Trenton, 38. They also have accumulated a lot of credit card debt - together they owe about $135,000.

Part of their problem is a home they need to sell. They bought a new home and decided to rent the house they were leaving. But because of the housing crisis, they couldn't command enough rent to cover the $2,800 mortgage. They are renting the home for $1,800, leaving a huge deficit.

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

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