Troops Should Budget Wisely in Face of Fluctuating COLAs
By Lisa Daniel
American Forces Press Service
WASHINGTON, Sep. 30, 2011 Pentagon officials are reminding service members stationed overseas to leave out cost-of-living pay when planning their personal budgets, due to fluctuations in the rate.
The cost-of-living allowance, or COLA, paid to those stationed outside of the continental United States to off-set foreign costs, routinely is affected by the economy and fluctuates from pay period to pay period, Pentagon spokeswoman Eileen Lainez said. Many service members will see a reduction in this month’s payment, reflected in their mid-October paychecks, she said.
With that in mind, Lainez said, department officials said it is a good time to remind people “they should plan their budgets around what they can afford without the COLA.”
About 260,000 service members at 600 locations receive the allowance, which is based on rank, years of service, location, and numbers of dependents, she said. The State Department manages the COLA of federal civilians overseas.
The value of the dollar against foreign currency, changes in prices of goods and services, and changes in the amount spent on “COLA-type” items such as food, household goods and transportation cause fluctuations in the pay, Lainez said.
As an example, she said, an E-6 with three dependents in Yokota, Japan, saw increases of his COLA pay of $26 in July, $56 in August and $27 in September, but will see a decrease of about $30 in October, as fluctuations continue.
“We continue to stress to service members that because of the fluctuation, fixed expenses, such as rent and car payments, should be based on what service members can afford without the COLA,” she said.
During the most recent period data was collected, service members bought less expensive goods and services and spent less money on items such as food, clothing and auto insurance, affecting the COLA rate, Lainez said.
Also, she said, as the dollar gets stronger, service members stationed in overseas locations can expect COLA payments to decrease. Members stationed in locations using the Euro can expect their COLA payments to decrease due to the declining value of the Euro against the dollar.
Service members can calculate their COLA payment by using the COLA calculator located at http://www.defensetravel.dod.mil/site/colaCalc.cfm.
To learn more about COLA and other allowances, visit the Defense Travel Management Office website at: http://www.defensetravel.dod.mil/site/allowances.cfm.