Budgeting for COLA Payment Fluctuations

Service members��� overseas Cost of Living Allowance (COLA) is routinely affected by the economy, and can fluctuate from pay period to pay period.�� Changes in spendable income (the amount Service members typically spend on COLA-type goods and services), shopping patterns, prices of goods and services, and currency fluctuations can all cause COLA to increase or decrease.�� Due to latest changes to these factors ��� Service members at some income levels stationed overseas will see a change in their monthly COLA payment.�� The extent of the change depends on a Service member���s rank, years of service, number of dependents and location.������

During the most recent period data was collected, members at the lower and higher income levels bought more COLA-type goods and services(such as, clothing, food, auto insurance, etc.), resulting in an increase to spendable income for those groups. Members in the mid-range income levels spent less income on COLA types of goods and services, resulting in a decrease to spendable income for that income range. As a result, Service members at the lower and higher income levels stationed overseas will see an increase in their monthly COLA payment.�� Some mid-income levels of compensation will see a decrease in their monthly COLA payment.�� The amount of decrease/increase varies by rank, years of service and number of dependents.

Overseas Cost of Living Allowance (COLA) is a non-taxable supplemental pay allowance, designed to offset overseas prices of non-housing goods and services.�� Approximately 240,000 members at 600 locations overseas, including Alaska and Hawaii receive COLA payments.

Overseas COLA is not a fixed amount and can fluctuate from pay period to pay period.�� It is important to remember that because of the fluctuation, fixed expenses, such as rent and car payments, should be based on what Service members can afford without COLA.��

COLA payments can be calculated by using the COLA calculator located at: http://www.defensetravel.dod.mil/site/colaCalc.cfm. The calculation tool is updated with the current COLA amount each pay period.�� The calculator will be updated on October 1st for the changes that will be reflected in the mid-October paycheck.