How do you color some parts of a letter, for example I have a lowercase "b" and want to make the ascender red and the counter blue. I'm using Illustrator how do I do this? 

For coloring the stem: You turn the text to paths, create another object (square, circle, whatever) and then create a clipping mask from both, so the colored object is clipped to the character shape. 

To color the b counter: Again, make sure the text is turned into paths, then use the function to break apart compound paths. As a result, the counter will be available as individual path you can apply a color to.