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What if They Ditched BAH, Added New Allowance?

A plan to replace Basic Allowance for Housing (BAH)  and the smaller Basic Allowance for Subsistence (BAS) allotments  is quietly being discussed by some Defense Department (DoD) officials, according to a story in the Army Times.

The plan, which officials made clear is no where near implementation, would replace BAH and BAS with a new cost of living-based allotment called "locality allowance." Unlike BAH, which is based on a snapshot of housing costs in any given area, the locality allowance would look at the overall cost of living, which could include things like the price of groceries, Army Times reported.

It's too early in the plan's stages to tell exactly what this would mean for your pocket book, although you could make the assumption that someone along the line would be getting less money since this is seen partially as a cost saving measure. The article speculated that any reduction would be felt less by officers simply because the allowances already represent a much lower percentage of their income compared to enlisted servicemembers.

There are some gotchas with this plan -- like figuring out exactly how it would be calculated. But what worries us most is what this would mean to families, particularly those who own a house at one duty station but live at another.

In my house exchanging our BAH and BAS for a different, perhaps smaller allowance would hurt but it wouldn't be a deal breaker financially speaking. We are able to rent below the rate we receive and don't live paycheck to paycheck thanks, in part, to both of us being employed.

But for many military families that is not the case. One friend of mine stretches their E-4 income to cover their family of five, the mortgage of their current home and the care and upkeep of a home they are renting out elsewhere. They purchased their home based on what they are making now.

If even one of their allotments was to decrease they would be in a very tough position. And the military is full of families just like theirs.

Then there is the benefits to base pay ratio that we've discussed before. These allotments, benefits and deferred pay, including our healthcare, pension and even the commissary, are what make our paycheck anything near reasonable. Without them being in the military is simply not financially sustainable long term.

Still, I can see some pros to this plan. For example, in very high cost of living areas such as Washington, D.C. and Hawaii where the cost of living is through the roof, BAH and BAS rates don't provide a big enough buffer. Being given a rate based on a snap shot of more than just housing costs would likely help people in those areas.

What do you think? With so little information about just how this plan would work, it's difficult to get a good read on exactly how this would impact day-to-day life. Still, we all know how the difference BAH and BAS make to us -- as well as what the local cost of food and services means.

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