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Military families know the government provides BAH to help cover the cost of living at their assigned duty station. But it’s more than just a number and well-known military acronym. It affects both budgets and standard of living.
Understanding what BAH is and how it works helps to make each dollar stretch.
What Is BAH?
"Basic Allowance for Housing, or BAH, provides uniformed service members equitable housing compensation based on housing costs in local civilian housing markets within the Continental United States (CONUS) when government quarters are not provided." -Defense Travel Management Office
There’s a lot of thought, research, and intention behind each location's BAH.
Behind the Numbers
Every year, the government collects housing cost data for about 300 military housing areas across the U.S., including Alaska and Hawaii. With help from local military housing offices and input from nearby commands, the cost of adequate housing units in that area or a particular neighborhood is determined.
Factors also include the median current market rent and the average cost of utilities such as electricity, heat, water, and sewer.
The Department of Defense carefully calculates BAH rates. It creates six housing profiles to account for different home types and the number of bedrooms in each area. Then, the department calculates the rates for each pay grade, distinguishing between those with and without dependents, to determine the final BAH amounts
While understanding the ins and outs of BAH doesn’t change the allowance, it helps with an understanding of the topic.
What BAH Is Intended to Cover
“Your BAH isn’t intended to cover 100% of your housing expenses—95% is more accurate. That leaves the remaining 5% coming from the remainder of your paycheck. Is 5% a lot? As far as percentages are concerned, no. But depending on where you live, you might find that 5% equates to several hundred dollars.” -Tips for Living Within Your BAH
What BAH Is Not
Remember, BAH is based on the cost of housing in an area. It does not factor in other expenses. Some service members thrive within the allotted BAH, though with constant market fluctuations, others feel it falls short of their financial needs. Strategic budgeting helps stretch BAH.
When BAH Doesn't Apply
When a military member moves overseas (not including Hawaii or Alaska), they'll find that the Overseas Housing Allowance (OHA) replaces BAH.
"The Overseas Housing Program enables authorized Service members assigned to permanent duty overseas to lease privately-owned housing. The Overseas Housing Allowance (OHA) is a cost-reimbursement allowance and is designed to offset housing costs. It includes three separate components: rent, utilities/recurring maintenance, and a move-in housing allowance (MIHA)." -Defense Travel Management Office
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Other Allowances
The Cost of Living Allowance (COLA) is another government allotment provided to military members in specified areas, both CONUS (Continental U.S.) and OCONUS (overseas).
The government provides CONUS COLA to help offset higher prices in the highest cost-of-living locations that exceed the average cost in the continental U.S. by seven percent or more.
“Service members serving outside of the continental United States (OCONUS) where the cost of living is higher than CONUS receive an Overseas Cost-of-Living Allowance (COLA). Overseas COLA is a non-taxable allowance designed to offset higher prices of non-housing goods and services OCONUS and equalize purchasing power with members stationed in CONUS. It does not reimburse expenses, compensate for remoteness, hardship, loss of spousal income, or non-availability of goods and services.” -Defense Travel Management Office
When applicable, COLA offers a cushion to help ease a service member's budget and maintain their standard of living. While it’s usually not enough to rework the numbers, it's best not to overlook it before analyzing finances and starting the house hunt.
Find out how much you qualify for with these COLA calculators:
Navigating BAH Fluctuations
Finances need constant tending, and many military families completely rework their budgets every PCS move, largely due to BAH changes. That portion of the budget holds a lot of weight among active-duty military members.
Housing, groceries, utilities, and commuting costs fluctuate from one duty station to the next. While some moves won’t change BAH more than a few dollars, other military moves, such as a PCS from Offutt AFB in Nebraska to Joint Base Pearl Harbor-Hickam in Hawaii, will rattle the numbers.
Yes, the BAH adjusts to reflect the change in the cost of living, but that’s only part of the picture. Say that a military member bought a home in SoCal when they received orders to MCAS Miramar. Then, they got orders to MCAS Cherry Point. The cost of living, along with the BAH, will drop. But their property in Southern California? The expenses stay the same. The solution? Sell or find a renter to move in and pay the mortgage.
Sounds easy enough, and for many, it works perfectly. But what if the member can’t sell as intended or find a tenant to fill the property? They now have California expenses plus a North Carolina cost of living with only North Carolina BAH to keep everything afloat.
There’s no cut-and-dried answer to this situation. What’s best for some won’t be for others, but it deserves some consideration when looking at the budget, specifically whether a service member should buy or rent a home at each duty station.
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Tips for Living Within Your BAH
The Basic Housing Allowance isn’t a budget. Service members create their budget. How far should the BAH stretch? Should BAH cover rent/mortgage or include all cost-of-living expenses like utilities, gas, and maybe even groceries?
5 Questions to Ask When Setting Your Househunting Budget
- How much is BAH? While it’s not the be-all, end-all of a budget, the BAH sets a pretty good foundation. Find your current BAH rates here.
- How much are utilities? Experts say to expect to pay about $400 a month, but this number depends on the location of the duty station. Of course, a service member might be able to cut down on that expense.
- Where does a service member want to live in proximity to the base? Proximity to the base is everything, especially when stationed in a major city like Washington, DC, or San Diego. In those areas, the cost of being close to base is typically higher than living outside the metropolitan area.
- What are the must-haves? Start with the big things like the type of property (condo, apartment, single-family home). Then, move down to the number of bedrooms and bathrooms needed to be comfortable. Lastly, look at the details.
- What are the wish list items? Everything has a price. If a fenced-in yard, pool, fitness center, proximity to great schools, and a two-car garage are priorities, that helps narrow the budget and the search. While some perks may fit within the budget, others have to go.
But don’t forget about financial goals. A service member's ambitions, whether to invest more money for retirement, save for children’s college tuition, pay off debt, or something else, can influence their house-hunting budget, as does the current housing market.
While some might be pros at living under their BAH, some duty stations make it more challenging. What members can get for less than BAH in Oklahoma might be just fine to call home or even favorable. But, many metropolitan areas require every penny of that allowance to find a suitable home for the family.
Should I Spend Beyond My BAH?
Yes! It’s okay to live beyond BAH. Most families have done it at one point or another, but it’s subjective. It all comes down to a service member's needs and wants. It might not be worth going over BAH for a nicer home when trying to pay off debt.
Understanding your Basic Allowance for Housing (BAH) is crucial for service members to make informed decisions about their finances and housing options. By knowing how BAH rates are determined, how they apply to different locations, and how they affect the budget, members can better manage their living situation and ensure financial stability. Taking the time to get familiar with the ins and outs of BAH can lead to a smoother and more cost-effective transition to each new duty station.
By Danielle Keech
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