When you live overseas and do not living in government quarters, you receive an Overseas Housing Allowance (OHA) that pays for your rent (up to a limit) and also provides you with an allowance for your utilities. There are two tricky things about OHA: the amount of dollars paid changes every month, with the exchange rate, and the bills it is supposed to cover don’t always show up in a timely manner. In the five years we lived overseas and received OHA, I figured out a way to keep the money straight and be sure that we always had the right funds to pay our bills.
Erratic Bills and Expenses
Let’s talk about the craziness of bills in Europe first. Utility bills can be large, and they don’t always come in nice monthly or bi-monthly schedules like we are used to in America. It is essential that you keep your utility money aside so that you will be able to pay when your landlord shows up with a 3000 Euro gas bill. (This has happened to me.) I recommend setting up a separate bank account to be used solely for your rent and utility money. While I don’t advocate any particular bank, DoD Community Bank can be good for this purpose because they can deal with both US dollars and your local currency. When we lived overseas, I automatically transfered my husband’s OHA payment directly to our Community Bank account each payday. I used that account only to pay our rent, utilities, and any other bills that were directly associated with the house. When utility bills didn’t come in a timely manner, or we didn’t need to fill the oil tank for many months during the summer, the money would accumulate until bills arrived or we needed to buy heating oil or propane or whatever. This saved me a lot of stress. As a bonus, most people don’t end up spending all of their utility allowance. That money makes a great PCS savings account, AND you’ll be closer to living off your actual pay, which makes the transition back to the US less painful.
Inconsistent Dollar Amounts
While your OHA amount is calculated in the local currency, it is paid in US dollars. This means that you will get a different amount each month, depending on the exchange rate in effect. Let’s look at an E-5 with dependents at Ramstein Air Base in Germany. Her maximum rental allowance is 1250 Euro per month, plus she will receive the monthly utility allowance of 675 Euro per month. This means her total OHA payment will be 1925 Euro per month, assuming that she has spent her full rental allowance. Sounds simple enough, but 1925 Euro rarely equals the same number of dollars each month. Just searching through the 2015 figures, it could be as little as $2082, or as much as $2394. Even though the dollars still represent the same number of Euro, it can be confusing and frustrating when you are trying to build a spending plan.
There are two ways to handle this: you can use averaging, or you can transfer exactly the amount of the OHA payment each month. Which method is better for you depends on two things: how much your exchange rate varies, and how organized you are. If your local currency’s exchange rates tends to go up and down within the same range, you might be perfectly fine choosing an average number to use across the year, and setting up an automatic transfer or allotment for that amount. However, if you live in a country where there are larger shifts in exchange rates, or if your budget is very tight, you might find it better to manually enter the amount of the transfer each month. You can see the amount of your OHA on your monthly Leave and Earnings Statement. In my case, I found that an average amount, rounded up to an easy number, worked well.
This method was great for our family’s spending plan. I knew that a set amount would be transferred from our primary bank account to our OHA account on the 2nd and 16th of each month. I then had an automatic transfer for our rent, and automatic debit for our electricity, and I paid for our heating oil and propane using a debit card attached to that account. I didn’t have to look at my primary checking account and mentally account for the fact that I’ll need to buy four tanks of heating oil to get through the winter. With a separate housing account, it is all tidy and efficient.
This certainly isn’t the only way to deal with OHA and housing costs overseas. Do you have other ways to deal with your OHA payments? I’d love to hear your tips.
image by: digital cat
Do you want to know more about your military pay and benefits?
Things change fast around here! Keep up-to-date with email alerts about the topics that are important to you!