Anne Forsythe, 32, and Aaron Forsythe, 34, rent in Renton. Anne cares for their 3-year-old and newborn; Aaron works as a game designer at Wizards of the Coast. They owe $26,000 total in student loans, car loan and credit cards, and spend $220 more a month than Aaron makes.

What they have

Aaron's 2006 income was $83,000, plus annual bonus. Anne will return to work part-time in a year. They pay $680 a month toward credit cards and $410 in car payments, and come up short $220 a month. Aaron puts $383 a month into his 401(k), matched at 100 percent, and the couple has $17,400 in retirement accounts.

What they want

Buy a house locally as soon as possible. But before they can apply for a mortgage, says certified financial planner Laurel Hair of Ameriprise Financial Services in Bellevue, they must pay off those outstanding debts.

What they need

Eliminate debt: Hair suggests the couple use Aaron's 2007 bonus to pay off their $3,500 in student loans. If possible, they should combine their credit-card debt, using their lower-interest-rate credit card, which has a $9,600 balance, to pay off the $3,900 balance on the second card, which has a higher interest rate. Another option: See if Aaron's employer allows loans against Aaron's 401(k); if interest rates are lower than their credit-card rates, pay off cards that way. Because the auto loan has a 3.99 percent interest rate, they should pay only the minimum monthly.

Stick to a budget: While the couple doesn't spend outrageously, they have never tracked expenses. Besides watching their cash flow, Hair recommends they see whether they can defer the $170 monthly payments on their life-insurance policy without penalty, until they're debt-free. Also, the Forsythes have put a moratorium on visits to family back East, which costs an average of $4,000 a year.

What they think

If the couple doesn't incur more debt, Hair predicts they'll be debt-free by the end of 2008. At Hair's recommendation, they'll start exploring the housing market this summer. While a 20 percent down payment is ideal, they may not want to wait until they've saved that much, Hair says.

"We still have to get ourselves out of the hole first," Aaron says. "But now we feel like we have the tools to do it."