How To Budget With Overseas Housing Allowance

When you live overseas, off-base, you receive an Overseas Housing Allowance. OHA 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. We received OHA for five years while living overseas. At first the budgeting was hard. But then, 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

First, let’s talk about the craziness of bills overseas. 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. When we lived overseas, I automatically transferred my husband’s OHA payment directly to our housing 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. Plus, 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 a hypothetically E-5 with dependents at Ramstein Air Base in Germany. Her maximum rental allowance is €1300 per month, plus  the utility allowance of €651  per month. This means her total OHA payment will be €1951, assuming that she has spent her full rental allowance. Sounds simple enough, but €1951 won’t be the same number of US dollars each month. Depending on where the exchange rate is on any given day, it could range by hundreds of dollars per month. Just searching through the last year’s figures, it could be as little as $2109, or as much as $2424. 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 and the amount you receive varies every month.

My Solution To Overseas Housing Allowance Payments

There are two ways to handle this:

• You can use an average exchange rate
• You can transfer exactly the amount of the OHA payment each month

Which method is better for you depends on how much your exchange rate varies, and how organized you are. If your local currency’s exchange rates tend 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. A set amount was transferred from our primary bank account to our OHA account with each paycheck. Rent and electricity were paid from that account automatically. Heating oil and propane bills were paid using a debit card attached to that account. I never had to look at the balance in my primary checking account and mentally account for the fact that I’d 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.