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DoD May Slash Your Housing Allowance

Think your Basic Allowance for Housing (BAH) is safe from the long arm of sequestration? Think again.

According to this Army Times article the Pentagon is considering cuts to BAH rates as a way to find continued savings within the Defense Department.

Most BAH rates change slightly every year after DoD conducts its survey of housing costs. Using a complicated series of metrics that takes into account things like housing supply and demand and the average cost of a home for a snapshot of family types and sizes, DoD decides whether to lower or raise any given rate. Servicemembers who already live at a location where a rate has been lowered continue to receive the higher rate, while newcomers receive the lower one. If there is an increase everyone benefits.

One of the ways DoD could find BAH savings, the article says, is to lower rates across the board so that troops are paying about 20 percent of their housing costs out of pocket, just like they did prior to 2001. Another way would be to subject everyone to a new, lower rate instead of allowing those who already live at a location to stay under the old, higher rate. Still another option could be “slowing growth” of rate increases.

Read more: Cutting BAH? Let's Not Loose Our Minds

I don’t know about you, but in this family we pick our house based on our BAH rate so that we have enough money to cover both the house itself and our water, electric, gas and internet (provided I can control myself with the air conditioner). If we had to pay 20 percent of our housing costs out of pocket we would probably be OK, but we would definitely need to reexamine our budget.

But not everyone is so lucky. Large families in lower pay grades or those in very high cost of living areas often have a hard time finding a place where they can cover all of their housing rental expenses with BAH. Some families buy their home because their mortgage is lower than their rental costs. And then there are the folks who want more house than they really need or can afford. I know of one family who is spending $1,000 more than their BAH each month so that they can live on a lake.

When I told my husband about this plan his response was immediate.

“Easy. If the rate goes down we’ll move on base.”

You can bet that his reaction is the same as everyone else. But wait times for housing at some bases are already obscene. Here at Fort Campbell we chose to live off post rather than find a temporary place and wait seven months for an on-post home. Lowering the rates will likely result in a rush on base housing, leaving some families out in the cold to fend for themselves and drain their pocket books.

Some of you are thinking that lowering the BAH rate for everyone is a good thing. After all, everyone else in the world doesn’t get paid an additional tax exempt amount on top of their paycheck for housing expenses. Why should the military be so special?

And while that may be a reasonable point for families who are stationed in normal, low cost of living places like Clarksville, Tenn. or Columbus, Ga., plenty of families have been sent by the military to places like Hawaii or Monterey, Calif. Without additional cash each month military families could never afford even the cost of gas in those places, much less a place to live.

What do you think? Is reducing the amount you are paid for housing a good idea? Will you still be able to pay your bills if you start receiving $800 instead of $1,000 for housing each month or $1,280 instead of $1,600?

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