Most servicemembers stationed in Hawaii will see an increase in their May paychecks. April 19, the Per Diem, Travel and Transportation Allowance Committee (PDTATAC) approved Cost of Living Allowance (COLA) changes effective immediately. Based on this year's data, the committee determined changes were due for three Hawaiian Islands (Kauai, Maui and Oahu). Kauai received the largest change with a 4-point increase, while the Big Island remained unchanged. The changes came about as a result of the December 2004 - March 2005 COLA (Retail Price Survey) survey.
For those of you who do not know what COLA is :
The Overseas Cost of Living Allowance is a supplement designed to equalize purchasing power between members overseas and their CONUS-based counterparts. The average supplement is $300 per month. The basic measurement is a comparison of CONUS shopping behavior and the aggregate shopping behavior at each overseas location. It impacts 320,000 members at approximately 600 locations overseas, including Alaska and Hawaii. The current cost is approx. $1 billion annually.
So our COLA is going up. There was an increase in the housing allowance at the beginning of the year and a COLA increase about that time too. That's wonderful news but it doesn't help much.
Don't get me wrong - I am NOT complaining. But I was talking with a friend of mine - a former Captain with 4th ID - yesterday and he asked me if we were renting or buying our house that we are moving into in LESS THAN SEVEN DAYS (not that I'm counting...). I just about dropped the phone from laughing so hard.
BUY a house in Hawaii?? HA! Not on our income or that of most people we know. We *might* be able to find a condo that was within our budget and fit our needs but it's doubtful. If we did, most likely the commute would just about kill McGyver and our gas budget.
Hypothetically speaking, our housing allowance is about $2200 and our COLA is just over $500 per month. In the area in which we are renting, an average 3 bedroom house goes for about $350,000 (for the lower end houses) and up. For this example, I'll use a purchase price of $400,000. Assuming a 30 year mortgage and a 6% fixed rate loan through the VA with zero on the down payment (remember, we're still busting our butts to pay off our debts), our mortgage payment (not including homeowner's insurance, property taxes, etc) would be about $2400 per month.
The interest rate assumption is a big one on my part - I have little clue as to what the average mortgage rate is right now nor do I know what we would qualify for (probably not that wonderful of a rate just because our existing debt load is high).
Now, we COULD afford the mortgage payment (and insurance, taxes, utilities, repairs, etc.) but that would mean Princess Trouble would not be able to go to preschool, or dance classes, or swimming lessons. And Little Man would not get any kind of time with mommy alone because Princess Trouble would not be in school. And I'd probably have to go back to work and put my kids in day care so that we could afford to eat more than "rice and beans, beans and rice" each day.
We COULD do it. But we're not going to. I don't mind renting right now. Really, I don't. There is a sense of security in knowing that, should the toilet start shooting water toward the ceiling or the roof cave in above the garage...I can CALL THE PROPERTY MANAGER. Even if McGyver is playing Army in the desert somewhere, I can CALL THE PROPERTY MANAGER and not have to exhaust our (meager) savings to pay for it. There is also a sense of security in knowing that, if we wind up hating the house we've rented, we are only tied to it for a year and should we choose to cut our losses at a year, we're not sacrificing the closing costs, down payment, etc. that we would have put into a purchased house.
Not to mention the fact that I'm still a little gun-shy on the whole "you'll be here for at least 3 years" thing...
My point is this : while the increase in COLA (and the increase in housing allowance back in January) is welcome, don't think for a moment that it's going to make a huge difference over here. It will help but right now I don't know that it is possible to keep up with the pace of rising prices here right now.