What Is Up With My Overseas COLA?

Lots of active duty service members receive an Overseas Cost of Living Allowance (COLA), designed to partially offset the high cost of living in some overseas locations.  The COLA is based on a baseline calculation of the difference in costs, and then adjusted as often as twice a month to reflect changes in the exchange rate between the US dollar and the local currency.  (COLA is one of the only allowances that is calculated on a half-month basis.)

Servicemembers in Europe have probably noticed that their paychecks have been significantly smaller the last few months, and the fluctuating Euro to dollar exchange rate is to blame.  The COLA calculations include a wide variety of information, including estimated disposable income, spending paatterns, and the exchange rate.  As the US dollar strengthens against the Euro, COLA amounts go down.  Even a relatively small change in the value of the dollar can result in fairly large changes in COLA.

Over the last six months, in Europe has dropped between 10 and 20%.  For an E7 with three dependents in Naples, Italy, it has fallen from  $548  to $486 for a half-month.  For an O3 with two dependents in Ramstein, Germany, it has gone from $465 to $417 for a half-month.  The idea is that with the stronger dollar, you should come out even.  It can still be a bit shock when you get that deposit or check your LES!

With economic uncertainties in the US and abroad, it is reasonable to be prepared for fluctuations in COLA.  If you receive COLA, figure out what would work for your family so that you don’t get stuck if the amount changes a lot.

Not sure what amount of COLA that you receive?  Check out the COLA Calculator.

There’s also lots of great information in this COLA Frequently Asked Questions page.

About the Author

Kate Horrell
Kate Horrell is a military financial coach, mom of four teens, and Navy spouse. She has a background in taxes and mortgage banking, and a trove of experience helping other military families with their money. Follow her on twitter @realKateHorrell.
  • Randel Cassels

    I do not see the cost of the things needed to conduct everyday life in Europe going down any… 18 months ago, fuel was $85 per 100L.. now it is well over $115…. food at the commissary or in the local are has not changed either. The cost of a watermelon at the commisary this summer was insane and peanut oil today was rediculous. What I see is the FG (Federal Government) taking back the money they plan to give to the Military in the form of payraises next year.. rob peter to pay paul.

    • Steven S

      Quit crying… Gas here 18 months ago was $2.30 a gallon now it is 3.79… And people in the us don’t get paid more because of the change. Be grateful and shut it

  • cathy hafner

    What? Shut it? Are you kidding, look at the pay rate of these guys and the cost of living in Europe is nothing like the US, yet! Give him a break he’s right I just paid more for peanut oil in the commisary in Charleston, SC and later seen in local groc store for $8. less. What’s up with that?

  • Carrie

    As expensive as it may be, just be glad you still have a job to pay for it!

  • ezequiel gonzalez

    Now, Chairman Bernanke (sic) became a politician. He is to guarantee veterans more money by printing more money to increase our debt (15T$) What an as*****. Sorry, Mr. Chairman, you have to go.