COLA remains constant, relatively speaking

INCIRLIK AIR BASE, Turkey -- Since I arrived at Incirlik last May, the exchange rate for Turkish Lira has spiraled from approximately 1.35 Yeni Turk Lirasi to the dollar to our current rate of slightly less than 1.17 YTL to the dollar. There are numerous economic factors influencing the exchange rate, but I won't bore you with an economics lesson. Instead, I will address the concern many Airmen have regarding a perceived drop in their spending power and how our Cost of Living Allowance rate helps. Based on myriad questions fielded by 39th Comptroller Squadron personnel regarding COLA, it is a concern many of us share. 

First, a quick familiarization: COLA is a supplement to our pay intended to equalize our purchasing power abroad with what we would expect to have in the United States. COLA varies according to rank, time in service and number of dependents, and because many variables determine how much our is, it changes from one month to the next. In fact, in our rapidly changing economy the COLA rate can change in as little as two weeks and could totally go away. 

Cost of Living Allowance fluctuation is not solely dependent on local economic conditions as it is closely tied to the average cost of goods and services our friends and families pay in the U.S. As prices increase locally, many Airmen may expect to see an increase in their COLA but, if corresponding prices in the states go up as well, we have not lost our spending power in relation to stateside residents, so COLA would not change. Indeed, if stateside prices go up and our prices remain the same locally, COLA will likely fall. The overarching idea with COLA is that we should be no better or worse off than if we were living in the U.S., and as a result our standard of living should remain constant relative to back home. 

So how should we plan for the unexpected COLA change? By formulating a budget that fits within our current fixed pay while remaining flexible enough to adjust to economic changes. We may need to assess our financial situation more often than our stateside counterparts to ensure we can adapt to COLA fluctuation. 

The bottom line is that COLA was established to sustain our paycheck's purchasing power overseas, but a well conceived personal budget is essential to managing our standard of living. 

For more information, Team Incirlik members may visit www.incirlik.af.mil and type "COLA" into the search block.