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winning your va claim

When we finally win our claims, Veterans are often faced with a significant influx of cash.

Not only do we receive the past-due benefits which can easily reach into the tens – or hundreds – of thousands of dollars, but we also have a monthly income that we did not previously have.

What to do with that Money?

Pay down debt?  Go to college?

Save for retirement?  Take care of family members?

To answer a few of those questions, today’s post is from Navy Veteran Doug Nordman.

Doug comes from a family with a tradition of service. Not only did he serve in the Navy for 20 years; but his spouse also served 17 years on active duty and 8 in the reserves. And his daughter, who just finished college on an ROTC scholarship, finds herself on a Navy destroyer as her first duty assignment.

For years, he battled for financial independence, and was ultimately victorious: winning that battle allowed him to retire to Hawaii, where he spends a good bit of time surfing and enjoying his life.

Doug and I talked recently about reaching financial independence as a Veteran.

Here are my questions for him – and his very astute answers.

What does a Veteran do when they receive a windfall from a VA Decision? How do they use this money to change the direction of their financial lives?

The answer is straightforward: spend less money.

But the real solution starts with a change of behavior and some financial education.  Those are more difficult steps to take.

Many of my clients have been living a life of debt, so they use that money to pay off the debt. What can they do next?

The first step is motivation.

It feels great to finally be free from a debt. Whether you freed up $500/month of income or whether you got a five-figure lump-sum settlement, pay off the high-interest debt first.

You should still buy groceries and pay your housing expenses with cash or current income – don’t add to the debt.

Throw that “extra” money at paying off credit cards, vehicle loans, and any other debt that has an annual interest rate of more than 5%.

If you have lower interest debt – like student loans or a mortgage – then keep making the required payments, and you can decide later whether to accelerate their payoff.

Don’t forget how you felt when you were in debt. Did you worry about making the payments? Did you and your family have to cut back on other expenses? Was it stressful? Are you tired of that lifestyle and ready for less stress? Was it worth going into debt in the first place?

Remember those feelings – write them down if you have to.

Once you’ve you’ve had enough of that life, then you’re ready to change your spending habits.

Commit yourself to build a better future for you and your family.


Okay. So pay off the high-interest debt. But how does a Veteran get started keeping from going BACK into debt?

Start with a small emergency fund.

It should be $500 to $1000 for doctor’s bills or repairing your vehicle. It’s not for new clothes or even a replacement TV– it’s for real emergencies that would put you back into debt.

If you’re an active-duty service-member then a $500 emergency fund is big enough. If you’re in the Reserves or National Guard – or have gotten out of service altogether – then you may want to consider a larger fund to cover 2-3 months of unemployment.

We talked about “breaking the cycle” of debt. How do you think a Veteran can keep from going into debt ever again?

While you’re paying off debt and building your emergency fund, start tracking your spending.

You want to know where your money is going so that you can decide if it’s worth the expense, and you’ll start by tracking every dollar that leaves your wallet.

Write it down or record it on your smartphone, or use personal-finance software like Mint or Quicken.

Find a tracking system that fits your lifestyle, because you’re going to keep this new habit for a while. As you pay off those debts you’ll free up even more income, so develop a spending plan.

Instead of dropping back into the debt spiral, start saving for your future. You can call this a “spending plan” or a “budget” or a spreadsheet, but start with at least 10% of your income into a retirement plan – like a Thrift Savings Plan or your Roth IRA.  Put aside more for your family’s education.

I know that after living a life of debt, I felt like I was entitled to have a little fun. Should Veterans stop spending money on things like entertainment and vacations?

I don’t think so. You’ll still spend your hard-earned income on entertainment, vacations, dining out, and other fun that you feel is worth the money.

However this time you can use your budget to line up your spending with your values.  If you want to enjoy restaurants or bars or clothing, then be willing to work for it.

If you want to buy something then save up the cash instead of using a credit card. Consider using Craigslist or thrift shops before spending at pricey retail stores.

You can skip the lifestyle expenses of your relatives or neighbors, and you can bring your own lunch to work or drive your older car for a few more years.

Tell people that your new values are in your net worth, not your spending.

If you’re struggling to set up your budget plan, then ask for help.

Search your local library for a free copy of “The Military Guide to Financial Independence and Retirement”.

You can get a copy on, or check a family service center at a nearby military base, where you should be able to get a free copy of the pocket guide.

The guide is packed with the advice and stories of over 50 other service-members and veterans who paid off debt, put their finances on track, and reached their own financial independence.

My understanding is that all royalties are donated to military charities (over $9000 so far), and we’re collecting your advice and stories for the second edition.

You can also learn more at Share your story there and accelerate your financial freedom!

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