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Is It Cheaper to Live On or Off Base?

It's a question every military family asks when they make a permanent change of station (PCS) move -- is it cheaper to live on or off base? And how do you choose which path to take?

We linked up with USAA financial expert J.J. Montanaro to get some advice.

Any decision to live on or off base is likely based on many factors beyond just cost, including whether or not housing on base is even available, the quality of the neighborhoods within a bearable commute of the gate, schools and more. When you decide what is best for your family, you'll probably look at those factors as well as the economics of it.

But for the purposes of this blog post, we're just going to look at how to figure out which choice is best for your pocketbook -- on base or off?

First, let's establish some facts.

By living on base you agree to give to the privatized housing company the entirety of your Basic Allowance for Housing (BAH). In exchange that company gives you the following: (1) a house based on a combination of what they have available and what your family size and rank qualifies for (2) rental insurance and all utilities, at least up to a certain usage point. (Some bases require if you to pay more if you go over a certain amount of electric or water usage. Some also send you a check if you use under that bench mark).  TV and internet come out of your own pocket.

When you take your BAH off base you are choosing your own house size based on your own preferences. Your BAH is deposited to your bank account and you spend it as you like. In theory, that money will cover the cost of a mortgage or rental as well as renter's insurance and utilities. TV and internet costs are not included in the amount the Defense Department chooses to pay in BAH, so you may not include those in your calculation, either.

How BAH is calculated may soon be changing -- and you could get less each month. Learn more here.

Whether or not it's cheaper to live off base is going to depend on your preferences, location, family size, schools and many other factors. But here are some things to think about.

Is It Cheaper to Live On or Off Base?

1. Compare what your Basic Allowance for Housing (BAH) will buy you off base to what you qualify for on base. How much you receive from the military in BAH money depends on your rank and the area in which you live. In some areas that money can buy you a spacious four bedroom rental in a nice neighborhood in town, while the size base can give you is a third of that. In others it will pay for a one bedroom condo, but base can give you a three bedroom home. It may sound like a no-brainer, but if you are going to get less house off base for the same amount you would forfeit for a large place on base, living on base is going to be cheaper.

Remember that BAH shouldn't be looked at as your base line for home shopping, USAA's  Montanaro said. "A lot of people think BAH is a starting point for shopping— whether to rent or buy. It’s important to remember that BAH is built to cover rent, utilities, and insurance. So when you’re shopping you should be shooting for a rental payment that is roughly 75 percent of BAH, or less if the goal is really to live cheaper than you would on base," he said.

2. Decide what size house you need. So you can get more home on base than you can off. But you don't NEED that space, is it really better?

If you are a young married couple with no children you probably don't need the three bedroom house they are offering you on base in exchange for your $1,200 a month. You may be able to take that money off base, find an apartment for several hundred dollars under BAH that more than fits your needs and lifestyle, and pocket the bulk of that cash. If that's true, living off base will save you money.

3. Don't forget utilities. When you live on base utilities are covered in your housing costs (at least until a certain point). But off base anything goes. The cost of heating your home can fluctuate month to month depending on the weather. Are you ready to foot the bill for that? If you don't like the unpredictability of off-base utility costs or aren't confident in your ability to estimate just how much they are going to cost, on-base may be a cheaper option.

 4. How's that commute? Finding cheaper and better housing off base may be possible, but will it mean spending hours in traffic or huge amounts of money on gas? Remember to factor in the cost of getting around, Montanaro told us.

5. Will you use off base services? If living off base means spending money on a gym membership instead of using the free on-base facility or regularly buying groceries at the expensive store instead of the commissary, living off base is going to cost you more. It may not be the initial cost of your housing, but it is coming out of your pocket book and is worth considering.

6. Don't underestimate the value of flexibility. If you're renting, your military clause will protect you from the consequences of a broken lease you come down on orders. But if you choose to buy off base, you may find yourself stuck with a huge financial burden if military life throws you a curve ball. "Flexibility is a beautiful thing," Montanaro said. "There may not be an immediate price tag that comes with being able to disengage from your housing arrangement if unexpected or untimely orders show up in your mailbox." Even if the math makes it seem like living on base will cost you more, ask yourself if that price tag is worth it for potential savings later.

7. Calculate the cost of mistakes. Living on base may cost you more, but it's a safe bet. If you buy or rent off base you are putting yourself in a situation where it is easy to make financial mistakes. You need to decide if you want to risk it. "It can be cheaper to live off base, but there is a lot room to make mistakes ... and mistakes can result in off-base living being more expensive," Montanaro said.

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