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The GOP’s Dodd-Frank Overhaul is Underway — Here’s What It Means for You

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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*Update: On Wednesday, the Senate voted 67 to 31 to overhaul the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 in a bipartisan effort to loosen several financial regulations put in place in the wake of the financial crisis. It will now move to the House. 

One of the most hotly contested components of the bill is its aim to loosen oversight of all but the largest banks in the U.S., freeing community and regional banks from tightened regulations they had long complained were overly oppressive. 

There were some new amendments added to the rule that were aimed at consumer protection, such as preventing lenders from putting student loans into default after a borrower dies or declares bankruptcy, CNN reports

The Congressional Budget Office released a report ahead of the Senate’s vote, warning that the bill's amendments could increase the likelihood of another financial crisis.  


After successfully ushering in the biggest tax overhaul in three decades, the GOP continues to follow President Trump’s lead in their efforts to deregulate the financial sector and create policies that buoy big businesses in the U.S.

The Senate is expected to cast a final vote Thursday on a bill that aims to scale back the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The Dodd-Frank Act was a sweeping piece of legislation that aimed to tighten government oversight of big banks in wake of the Great Recession. The bill is widely expected to pass as it has support from a dozen Democrats in the Senate, and the majority of Republican senators are likely to vote for it.

In an open letter to senators, the Center for Responsible Lending, the National Community Reinvestment Coalition and the National Consumer Law Center called the bill “harmful legislation.”

If it passes, this piece of legislation would be the most significant rollback of financial reform since the financial crisis, according to Joe Valenti, director of Consumer Finance at the Center for American Progress, an independent, nonpartisan policy institute based in Washington, D.C.

The bill has bipartisan support and surprisingly does not contain any mention of scaling back the Consumer Financial Protection Bureau. The CFPB was a centerpiece of the Dodd-Frank bill, and it was given wide reign to regulate and monitor the financial services industry.  But that doesn’t mean the CFPB is safe.

As the GOP works to reduce the scope of Dodd-Frank regulations in Congress, Mick Mulvaney, the acting director of CFPB, is doing his part to scale back the agency through other means. Most recently, he announced a review of the “usefulness” of the agency’s consumer complaint gathering and reporting, which includes a consumer complaint database available to the public.

What could these deregulation efforts mean for consumers? We reached out to experts to find out what consumers really need to be concerned about. Those who would be hit the hardest are the country’s most financially vulnerable homeowners and homebuyers — the lower-income families, the minorities and rural Americans, experts say.

Fewer banks are "too big to fail"

In wake of the financial crisis, many banks required taxpayer funds to help bail them out and avoid total collapse. To avoid this in the future, legislators made sure the Dodd-Frank Act included increased oversight over banks’ finances. In order to determine which banks were considered “too big to fail” and needed to be included in this enhanced oversight, the government decided to judge based on assets. Any bank with assets over $50 billion was included, which smaller banks have long argued was unfair and saddled them with much more administrative hassle (i.e. lots and lots of paperwork).

The newest version of the bill intends to ease those oversight requirements by increasing the enhanced oversight threshold to $250 billion from $50 billion. This means that 25 of the biggest 38 U.S. banks — which together hold about one-sixth of the assets in the entire financial sector — wouldn’t be subjected to stricter rules, Valenti explained.

This part of the legislation wouldn’t affect consumers immediately, but in the long run, its impact could be far-reaching. Dodd-Frank introduced strict regulations after the financial crisis to prevent future bank failures and bailouts. With the absence of regulation, it’s possible that banks could fail, particularly in an economic downturn, Valenti said. And in that case, the government could decide to use taxpayer funds once again to bail them out.

The 2008 financial crisis was a case in point.

“In every state, in 2009 and 2016, the magnitude of the crisis was so severe that people may not have felt the bank failures directly, but they felt their own financial situations deteriorate in unemployment and in bankruptcies, and people not being able to keep up with their mortgages and their credit cards,” Valenti said.

How homeowners may be impacted

Some other pieces of the legislation that deal with existing mortgage rules, however, are sure to  have a more direct impact on homeowners.

The new bill expands an exemption that allows mortgage lenders to avoid escrowing taxes and insurances on some high-cost mortgages. The escrow requirements forced lenders issuing loans for jumbo mortgages to set up escrow accounts in which future payments for property taxes and insurance could be kept. Basically, homeowners had to be able to make those payments upfront. The rule was enacted to make sure that homebuyers could afford their loans and additional costs.

“Potential homebuyers may not know exactly what they are getting into price-wise once you factor in taxes and insurance,” Valenti said. “And once they are in a home, without an escrow, people may find it difficult to come up with the money for a property tax bill or for homeowners insurance.”

In extreme cases, a homeowner could potentially lose his/her house or have to deal with forced placed insurance, which means the lender picks the homeowners insurance policy for the homeowner, which can typically be expensive and not very helpful to the buyer, Valenti said.

Another rollback of rules is likely to hit lower-income Americans living in manufactured homes, more commonly known as trailers.

As it stands, the Dodd-Frank Act prevents manufactured home companies from steering borrowers to their prefered lender. The new bill removes that requirement.

Alys Cohen, staff attorney at the National Consumer Law Center, explained that manufactured homeowners are some of the most vulnerable homeowners in this country because trailers are much cheaper than regularly built homes, but they may not necessarily provide the homeowner the same value.

“[The bill] makes it more likely that people with manufactured homes get much more expensive loans get than the ones they need to get,” Cohen said.

Race-based discrimination rules rolled back

Dodd-Frank requires banks to collect personal and financial information about the people they approve for loans, such as age, credit score and the race or ethnicity of the borrower, in greater detail than before. And this requirement was installed to monitor possible race-based discrimination in housing lending, experts say.

Before Dodd-Frank, experts say that evidence had shown that borrowers of color who had similar credit scores to white borrowers faced higher-cost mortgages or were targeted for inferior products. In some cases, minority homebuyers would not be able get a home in certain neighborhoods, Cohen added.

Valenti provided an example of how expanded the data is required by Dodd-Frank: “Instead of having a borrower just labeled as Asian Americans/Pacific Islander, you would have a field for Chinese or Vietnamese or Thai or what have you, which is is something I know that the Asian Americans/Pacific Islander community has really fought for over the years.” The same is true for other minority groups.

Valenti said that the specific data points are critical because policymakers, researchers and advocates rely on them to measure discrimination in housing finance.

Under the new bill, the expanded information would be no longer required for about 85% of banks and credit unions that make mortgages, experts say.

“If you carve 85% of the banks out of that requirement, there’s no way to insure that most banks in the country are making loans that aren’t discriminatory,” Cohen said.

Appraisal requirements change for rural homeowners

Another provision in the bill would potentially hurt homeowners in rural areas, where no home appraisal would be required at all if the loan is below $400,000 in home value. An appraisal can be a crucial component of the lending process, because it prevents homeowners from borrowing more money than their home is actually worth. If the appraised value of a property is lower than the buyer’s purchase price, banks will typically refuse to lend the homebuyer more money.

When there’s no uniform rule on how to decide how much someone’s home is worth before they take out a loan, the less likely the home value in rural communities would be accurate, Cohen said.

“The reason that matters is when you are taking out a loan, you want to make sure you are not borrowing more than your house is worth,” Cohen said. “If you borrow more than your home is worth, than you can’t cover the loan by selling the house.”

In this case, even if you sell the house, you still owe the bank extra money, Cohen explained.

“It also means that if you only think you are borrowing, for example, 80% of the home value and you are really borrowing 105% or 110%,” Cohen said. “Then you don’t have any more equity in the house to borrow against later if you need something in an emergency.”

What about the CFPB?

On the CFPB front, the picture isn’t rosy, either.

The CFPB is a federal government agency responsible for establishing consumer protection regulations and regulating key parts of the financial sector, such as the mortgage and debt collection industries.

The agency had zealously targeted bad actors in the financial industry since its creation, reclaiming nearly $12 billion for more than 29 million consumers. Its latest high-profile actions included fining Wells Fargo in the unauthorized accounts scandal and creating new rules around payday lending. It has also rolled out new regulations in the mortgage, credit card, debt collection and prepaid card sectors.

The Trump administration and Republicans have long sought to curtail the CFPB’s power as part of a broader effort to lighten federal regulation over financial institutions.

Richard Cordray was the agency’s first director, holding office from 2012 until he announced he was cutting his tenure eight months short at the end of November 2017. He had been criticized by Washington conservatives but was well-received by Democrats and consumer advocates.

Mulvaney, head of the Office of Management and Budget, took over the bureau in a drama that unfolded into a lawsuit. The fight over who is the legal boss of the bureau is still ongoing.

A former South Carolina representative, Mulvaney had said in a 2014 interview with the Credit Union Times that the CFPB was “a a sick, sad kind of way.” In 2015, he co-sponsored a legislation to eliminate the agency.

In truth, Mulvaney has taken a host of actions to dismantle the consumer watchdog since his appointment.

The CFPB called last week for public input on the usefulness of its consumer reporting system.

It was the sixth and last in a series of Requests for Information, as part of Mulvaney’s call for public comment on its enforcement, supervisory, rule-making, market monitoring and education activities that he issued back in January.

“This request for information on the ‘usefulness of complaint reporting’ is cover for Mick Mulvaney to build up a bunk case for why consumers’ voices should be silenced,” Melissa Stegman, senior policy counsel at the Center for Responsible Lending, told MagnifyMoney. “He is even hampering the agency from pursuing justice for the victims of Wells Fargo’s misconduct.”

The CFPB’s Consumer Complaint Database is a public platform that stores more than 1 million complaints about financial products and services since 2011. The CFPB forwards each complaint to the appropriate company for a response and analyzes the data to makes rules and enforce laws. The bureau shares the data with government agencies and presents reports to Congress.

The database has long had the financial service industry on edge, but consumer advocates say it helps hold the big financial institutions accountable. Concerns have been hovering over the database possibly going private under Mulvaney. The Dodd-Frank law requires that there be a complaint system, but it does not require it to be public, Valenti said.

“Mulvaney already has 1.2 million comments from the public on this matter – in the form of complaints about the practices of financial companies,” Stegman said. “He should read these Americans’ stories. 97% of consumers have received timely replies from companies when the CFPB sends them the complaints.”

What happens next

The CFPB started accepting public comments on the complaint reporting system in the Federal Register on March 6. The public comment window ends on June 4.

Ed Mierzwinski, Consumer Program director with U.S. PIRG, a grass-roots group, told MagnifyMoney he anticipates that companies that would like to ignore complaints and keep their abusive practices in the dark will urge the bureau to gut the public database.

“If Mulvaney agrees with the many companies that want to eliminate the public consumer complaint database,” Mierzwinski said, “then the winners will be bad actors that can more easily hide their abusive practices, making it easier for wrongdoers to prosper and consumers to be harmed.”

Experts urge consumers to share their concerns and opinions in support of the public database by submitting comments on this page.

Valenti encourages consumers to keep filing complaints while the public database lasts. He also suggests that they remind their representatives or senators that the system is valuable as issues like this may slip through the cracks while lawmakers are dealing with other things on the table.

“It’s very easy to vote on things in the abstract,” Valenti said. “But when you can show that an agency has really helped people living in your community, those stories are extremely valuable to lawmakers.”


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It Might Be Time to Adjust Your Tax Withholdings for 2018

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

It is advised that wage earners update their W-4 form whenever a major life event occurs, like a recent marriage or the birth of a child. It’s particularly important this year, however, to review your withholdings as the new tax law went into effect Jan. 1.

Under the new tax law, many Americans saw their tax brackets change, with the standard deduction almost doubling for both individuals and married couples, as well as changes to other common tax credits. These changes could affect how many allowances you should claim and how much tax should be withheld from your paycheck.

For many taxpayers, if they leave their W-4 form unchanged, it’s possible their withholdings will be off and, they could owe — or be owed — more taxes than usual. Depending on your personal preference, getting a big tax bill vs. giving Uncle Sam an interest-free loan for the year may not bother you as much. But for others, withholding too much in taxes throughout the year — that is, paying more than you really owe and getting a refund later — could mean losing access to much-needed extra funds during the year.

In an ideal situation, tax experts say it’s best if you owe no taxes at all and get a small refund.

But where do you even begin to figure out whether or not you should make an adjustment?

We’ll offer answers to key questions you may have in this post.

Experts we spoke with for this story have one common bit of advice for taxpayers: Check your paychecks and, if needed, adjust your tax withholdings for 2018 sooner rather than later.

Key terms to know

W-4: On a W-4 form, employees provide personal information, such as marital status, as well as any allowances you’d like to claim or additional income tax you’d like withheld. Employers use this information to determine how much tax to withhold for that employee.

Allowances: The more allowances you claim on your W-4, the less money will be withheld from your income in taxes throughout the year. If you want more money withheld, claim fewer allowances on your W-4.

Withholdings: Employees pay their federal income tax through tax withholdings, which are taken out of their paycheck. Tax may also be withheld from bonuses, commissions and other forms of income.

Standard deduction: The standard deduction is a flat dollar amount that reduces your taxable income and varies according to your filing status. You can only claim the standard deduction if you don’t itemize your taxes. The standard deduction nearly doubles under the new tax law.

  • Single: $12,000
  • Head of household: $18,000
  • Married couples filing jointly: $24,000

Itemized deductions: Some expenses are tax deductible, such as charitable donations or interest paid on student loans. If you add up tax deductible expenses you paid throughout the year and the amount is larger than the standard deduction, you will likely choose to take the itemized deductions instead.

Should you adjust your withholdings for 2018?

First, a quick primer on the importance of the W-4 form: The higher the number of allowances you claim on your W-4, the lower your tax withholding is throughout the year. Therefore, you can expect a bigger paycheck.

As a result of the tax changes, the majority of Americans will see a slight bump in their take-home pay, Mark Luscombe, principal analyst at Wolters Kluwer Tax & Accounting, told MagnifyMoney.

“If they don’t adjust their withholding, they are likely to see a bigger paycheck,” Luscombe said. “If they file a revised W-4, then that could mean even a bigger paycheck. But it really depends on what they put on the new W-4.”

Luscombe said it’s important that employees — especially those in more complex tax situations — update their W-4 form, making sure their withholding is as accurate as possible.

TurboTax CPA Lisa Greene Lewis said those who usually claimed the standard deduction may see fewer changes under the new tax law than itemizers unless major personal or financial events are happening this year. The biggest change they will see is a bigger standard deduction. The population of taxpayers claiming the standard deduction is expected to grow under the new tax law as a result of the almost doubling of the standard deduction and the elimination or reduction of some itemized deductions.

The story may be different if you’re planning to itemize. That’s because the new IRS withholding tables, which payroll departments use to determine how much money to take out or your paycheck, assumes each worker will claim the cut-and-dried standard deduction. But the tables don’t take into account all the individual factors that might be involved, such as the number of children the taxpayer has, experts say.

Here are some of the groups who might want to make an adjustment:

People who prefer a smaller refund

Under the new tax law, it’s expected many Americans will see a bigger paycheck than usual. That means, if they make no changes to the current withholdings and have the same amount of taxes withheld as 2017, they may get a bigger refund next year.

It’s worth pointing out that some people may actually prefer things this way. They may see their annual tax refund as a form of forced savings or a nice windfall they can use to catch up on debt or cover their annual family vacation. Nearly 112 million tax filers received an average tax refund of $2,895 last year, according to the IRS.

“Some people seem to not mind giving an interest-free loans to the government and like getting a big refund at the end,” Luscombe said. “I guess maybe they think the government is better at saving their money than they are.”

But if you prefer a smaller tax refund later — especially if you plan on itemizing and claiming deductions for 2018 — you may want to revise your W-4, increasing the number of allowances you claim to lower the withholding even further, Luscombe added.

People who itemize their deductions

Because the standard deduction was nearly doubled under the new tax law, many people who used to claim itemized deductions may now have to claim the standard deduction for 2018. When you know you’re going to claim deductions on your taxes, you might choose to have less taxes withheld throughout the year, experts say.

If you were in this camp of people before, you might very well decide that it makes more sense to claim the increased standard deduction in lieu of itemizing in 2018 if the standard deduction is now more than your itemized deductions. And in that case, certain deductions are gone or reduced. So you need to go back to your W-4 and make an adjustment so more taxes are withheld than before, Lewis said

Even before the biggest tax reform legislation in a generation passed, itemizers always had a more complicated time around tax season.

In a recent MagnifyMoney study, we analyzed IRS tax data for 100 of the largest U.S. metros over a five-year period (2012-2016). We found that itemizers were more likely to owe taxes than those who claimed the standard deduction.

The new tax law gives itemizers just one more reason to carefully estimate their 2018 tax obligation to avoid owing money to the government.

Families with children

Married couples with children should also move quickly to figure out their 2018 tax liability due to the elimination of personal exemptions and the increase in child tax credit.

In the past, taxpayers could reduce their adjusted gross income by claiming personal exemptions — generally for the taxpayer, their spouse and their dependents. Married people who filed jointly could claim up to five personal exemptions if they have three children, also allowing five withholding allowances or more if they itemize, Lewis said.

Things will be a little more complicated this year. While the personal exemptions are gone, the child tax credit — which allows parents to offset the cost of raising children — doubles to $2,000 per qualifying child, up from $1,000.

“If [couples who itemize] didn’t change their withholding for 2018, they could wind up owing money to the government, because they are going to see more money in their paycheck, but it depends on their deductions,” Lewis said. “If they normally claimed the standard deduction, they may not because the IRS says their new withholding tables incorporate [that situation].”

How make sure your withholdings are correct

We get it, this stuff can be incredibly difficult to understand.

One way to get your bearings and a general sense of whether you should adjust your withholdings is to use the new IRS withholding worksheet and calculator.

The IRS finally updated the much-anticipated new W-4 worksheet and its online withholding calculator for 2018 to reflect changes in the new tax law.

April Walker, lead manager on the tax practice and ethics team of the American Institute of CPAs, suggests taxpayers go through the worksheet on the new W-4 and fill it out based on your personal and financial situation. You will be able to figure out the number of allowances you can take for 2018, which may or may not change from 2017.

Another strategy is to take a look at your most recent paycheck to see how much was taken out in federal taxes. Compare that number with the number you get from the IRS tax withholding calculator, which can project your 2018 tax obligation. Walker said that’s a pretty general way of making sure that your withholding is in line with what your actual liability will be.

If your withholding seems to be too low compared with your estimated 2018 liability, you can adjust the number of allowances down, Walker said. There is also an option to withhold more if you are already claiming zero allowances. If it looks like you are withholding too much, you can increase the number of allowances so that your withholding will decrease.

Because of the delay in starting the new withholding rules (companies were required to comply with the new withholding rules by Feb. 28), many people were basically withheld under the rules from the old tax law for January and February. So in some cases, employees may have more withholding than they otherwise should have had under the new rules, Luscombe said.

This doesn’t mean you paid more taxes than you should have. The withholdings for the first two months will be reflected in your tax return in 2019. But they might be higher than they should have been.

If you surely don’t want to lend Uncle Sam even one more penny than you should, Luscombe said you can compare your withholdings in March with your withholdings in January. Depending on how much the difference is, you could claim more allowances in the following months to offset the higher withholdings in January and February.

If you still have questions about your withholdings, you may want to seek out a CPA for help.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

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Shen Lu is a writer at MagnifyMoney. You can email Shen Lu at


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Short-Term Health Plans: What They Are and How They May Change Under Trump

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.


The Trump administration is looking to extend the availability of short-term health insurance, offering alternatives to the comprehensive Obamacare plans.

The Department of Health and Human Services, the Internal Revenue Service, and the Employee Benefits Security Administration proposed Feb. 21 to allow individuals to buy short-term health insurance plans for just under 12 months, extending from the current maximum period of three months.

If the administration were to finalize the proposal, the rule would allow individuals to buy health insurance policies outside the health insurance marketplace of the Affordable Care Act, also known as Obamacare, for a much lower price — but with very limited benefits.

Supporters of the expansion of the short-term plan see it as President Donald Trump keeping his campaign promise of providing Americans more options and access to cheaper health care.

“In a market that is experiencing double-digit rate increases, allowing short-term, limited-duration insurance to cover longer periods gives Americans options and could be the difference between someone getting coverage or going without coverage at all,” said Centers for Medicare & Medicaid Services Administrator Seema Verma, in a statement.

But health care experts and consumer advocates say it would further undercut the individual insurance marketplace. Along with the loss of the individual mandate after 2018, a key provision of the ACA that required non-exempt individuals to have health insurance, experts anticipate this new rule will drive many young and healthy individuals to forego comprehensive Obamacare for the more affordable short-term plans. Experts say this would end up driving up the premium costs for the older and sick left in the risk pool while not properly protecting the short-term plan users.

What are short-term health plans?

Short-term, limited-duration insurance has been around for years. It was designed for individuals in a temporary health coverage gap, such as people in between jobs.

The Obama administration in 2016 issued a final rule to curb short-term health plans because of the limits on those plans that may prevent them from providing “meaningful health coverage.” The rule changed the definition of short-term health plans from those that lasted less than 12 months to those that last less than three months.

Short-term plans are not regulated by the ACA. They in general don’t cover preexisting conditions. Insurers could easily deny coverage to consumers with health conditions or charge a higher premium with no limit, according to the Kaiser Family Foundation. Short-term policies typically don’t offer all essential benefits, such as maternity care, prescription drugs, mental health care and preventive care, according to the KFF. Short-term insurers may also set a dollar limit on how much of a consumer’s medical services they will cover.

Pros of choosing a short-term health plan


The biggest selling point of the short-term plans is their low price point.

The average monthly premium for a short-term plan in the fourth quarter 2016 was about $124, less than a third of the cost of an unsubsidized comprehensive Obamacare plan, according to the HHS.

Jesse O'Brien, health care advocate with U.S. PIRG, a public interest advocacy group, told MagnifyMoney that short-term plans may be a good option for young and healthy people without health coverage for a short period of time and they know how long the period of time is.

Atop that, they would also have to be lucky, because no one can predict whether they would have a medical emergency, and subsequently, get hit by huge medical expenses while on a short-term plan.

“It’s taking a bit of a risk because these plans are not very comprehensive,” O’Brien explained. “And they may not cover as much as people think.”

Better than no coverage

Short-term health insurance is intended to offer consumers protection against out-of-pocket costs for unexpected injury or hospitalization, according to eHealth, a national online health insurance broker.

Short-term coverage varies widely, as the plans are not subject to ACA regulations. In general, they cover doctor visits, emergency care and hospitalization. Consumers are subject to paying a deductible or a copay, depending on the plan.

Pro tip: know what you’re paying for
If you choose to buy a short-term plan, should its duration be expanded to 12 months, carefully read the fine print and check the provider’s reputation, said Cheryl Fish-Parcham, director of Access Initiatives at Families USA, an advocacy group for health care consumers. She said it’s crucial for plan users to know what they will and will not be protected against because there is no rule requiring coverage for a particular set of benefits. Many carriers have a lot of exclusions.

Cons of choosing a short-term health plan

Limited coverage

Even though it might be a reasonable option for some people in limited situations, short-term coverage really isn’t very good insurance for the long run, O'Brien said.

Short-term plans are cheaper upfront because insurers can discriminate against sick people with expensive conditions and deny coverage to them, O'Brien said, but it’s cheaper also because it simply covers less.

“People may not understand how much less it covers until they get sick or injured and their plans may not be there for them,” he said.

Less value for what you pay

Short-term health plans are not subject to a rule called the Medical Loss Ratio, or the 80/20 rule, under the ACA: It requires insurers to spend at least 80 percent of the premium you pay on your medical claims, leaving them 20 percent to spend on administrative, overhead and marketing costs. (For insurance companies selling to large groups, the MLR is 85/15.) If insurers spend less than 80 percent of premiums on health care costs and efforts to improve the quality of your care, they have to send you a rebate for some of the premium you paid. Lawmakers designed the rule to hold insurers accountable for how they spend consumers’ money.

The KFF found that in 2016, short-term plans spent an average of 67 percent of people’s premiums on medical services, while the top two insurers in the short-term plan market — who together sold 80 percent of all short-term policies — only spent 50 percent of premium dollars on medical services. This means that less of what you’re paying upfront ends up going toward covering your health care expenses.

Some plans have no in-network options

Fish-Parcham added that many short-term plans don’t have particular network providers, so you may be more likely you see doctors out of network. In that case, the plan user is on the hook for the remaining costs, Fish-Parcham said. When insurers have a network of preferred providers, insurers and providers have negotiated service pricing. Without such a network, there may be a large gap between what the provider bills you for the service you received and what the short-term insurer will pay for that service.

Limited access to coverage

You may qualify for a short-term health plan now, but you can’t bank on it in the future.

Say you develop a medical condition during the time when you’re covered under a short-term policy. Fish-Parcham said you would likely be denied other short-term plans after, because you would now have a preexisting condition. At that time, you would have to wait until the next Obamacare enrollment window open to buy health coverage.

What could happen if people abandon Obamacare for short-term plans?

The short-term plans are essentially only available to the young and healthy who don’t have preexisting conditions.

Federal agencies estimate that in 2019, between 100,000 and 200,000 previous Obamacare users would leave the marketplace for short-term policies. Without those people sharing costs in the individual health insurance pool, the average monthly premiums for the left behind — those who do need comprehensive insurance — will rise, according to the agencies.

“Everybody at some point in their life is going to get sick and has something that could be a preexisting condition,” O’Brien said. “I think we count on a health insurance market be there that can help us in that situation. This new rule could really undermine that.”

In particular, unsubsidized Obamacare users — those who earn enough to rise above 400 percent of the federal poverty level — would be hit hard, experts say.

O'Brien explains that lower-income individuals who get subsidies through the ACA wouldn’t be impacted much. Many may choose to buy a short-term plan, but if they stayed with Obamacare, they would be insulated from the impact of the expansion of the short-term plans because subsidies increase as premium prices go up, he said.

But the middle and upper-middle class, especially those who haven’t reached the eligible age for Medicare, would suffer.

“If you are at 405 percent of the federal poverty line, and you are 60 years old, your premium is already very high,” O'Brien said. “And the subsidies aren’t there to insulate you from any premium increases that would be caused by this ... it could really drive a lot of people out of the insurance market.”

Fish-Parcham argued that loosening rules on short-term plans would eventually affect subsidized Obamacare users, too, because fewer insurers may be willing to sell policies in the marketplace following the exit of the young and healthy.

What happens now?

The federal government is soliciting public comments on the proposal. The 60-day public comment period ends on April 23, after which the agencies can review the comments and revise the rule accordingly before publishing a final rule in the Federal Register. When issuing a final rule, agencies must describe and respond to the comments, and sometimes agencies withdraw the proposal in the post-comment period.

If the agencies finalize the rule, it would go into effect 60 days after the administration issues the final rule.

O’Brien said the likelihood of the proposal become a federal rule is “very high” because the administration has already taken other actions to undermine the ACA individual insurance market, like shortening the enrollment window and eliminating the individual mandate.

It’s unclear how long it would take the administration to finalize the rule, but O’Brien said it’s possible it could go into effect later this year.

The proposal came after Trump issued an executive order last October to expand the availability of short-term insurance plans and offer more low-cost health care choices for Americans.

Experts urge concerned Obamacare users — especially those who have purchased short-term plans and can speak from experience — to submit comments to the federal government.

How to share your opinion with the government

There are four ways where you consumers can submit comments on the regulation:

  1. You may submit comments electronically on this page.
  2. You may send your written comments through regular mail to:
    ATTN CMS-9924-P
    Centers for Medicare & Medicaid Services, Department of Health and Human Services
    P.O. Box 8010
    Baltimore, MD 21244-8010
  3. You may submit written comments through express or overnight mail to:
    ATTN CMS-9924-P, Mail Stop C4-26-05
    Centers for Medicare & Medicaid Services, Department of Health and Human Services
    7500 Security Boulevard
    Baltimore, MD 21244-1850
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What Trump’s Budget Really Means for Student Loan Borrowers

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student loan budget

There has been a lot of buzz around President Donald Trump’s $4.4 trillion budget proposal outlining steep spending cuts to domestic programs, including the federal student loan program since it was unveiled Monday.

If you are a student loan borrower, rest assured that this budget won’t cause changes — at least not directly. Experts interviewed by MagnifyMoney all said the proposal barely means anything to student loan borrowers or prospective borrowers because Congress may completely ignore it, as it did last year and many years in the past.

“The president’s budget in general is just a proposal and messaging document,” said Josh Gordon, policy director at The Concord Coalition, a national nonpartisan fiscal advocacy group. “And it doesn't have the force of law. It doesn’t get voted on in its entirety.”

However, the proposal does allude to the White House hoping to reform the federal student loan program.

Trump’s blueprint would streamline income-based loan repayment plans, eliminate the Public Service Loan Forgiveness Program and scrap subsidized loans. These policies would save roughly $203 billion over 10 years. While the savings amount is larger than what Trump recommended in last year’s proposal, the proposed policy changes stay largely unchanged from last year’s, which Congress did not act on.

“The chances of it being acted as written I would say if it’s not zero, it’s close,” Marc Goldwein, head of policy at Committee for a Responsible Federal Budget, an independent, non-profit, bipartisan public policy organization based in Washington, D.C., told MagnifyMoney. “But I could see pieces of it passing, particularly if there’s a broader higher education bill or some kind of deficit reduction bill in the next couple of years.”

What to know about Trump’s proposals

Trump proposed changing student loan policies that would apply to loans originated on or after July 1, 2019. Those who are borrowing now wouldn’t be affected.

Here are three pieces of major policy change recommendations:

1) Simplify income-driven repayment programs

The new budget plan would collapse income-driven repayment plans — monthly student loan payment calculated based on income and family size — into one, under which student loan borrowers would pay 12.5 percent of their monthly income toward student loans. Borrowers in general pay 10 percent under current plans.

Borrowers may have their remaining balance forgiven after 15 years if their loans covered undergraduate education. But those who borrow for graduate-level studies would have to make 30 years of payments before their balance can be forgiven. Under current law, loan forgiveness for private-sector employees kicks in after 20 or 25 years.

2) Eliminate subsidized loans

Subsidized loans are need-based undergraduate loans that the government pays interest while the student is enrolled at least half time or while the loan is in its grace period or deferment. After that, the borrower starts paying interest. Unsubsidized loans, on the other hand, accrue interest while the student is in school, in grace or in deferment, and the borrower is responsible for repaying all of it.

3) End the Public Service Loan Forgiveness program

As an incentive to encourage students to work in the public sector, government employees or those working for qualified nonprofit organizations may have their loan balance forgiven after 120 on-time payments (which takes a minimum of 10 years). Trump suggested ending this program.

Goldwein said the fact that Congress didn’t act on any of Trump’s last budget recommendations about student loans convinces him that not much is going to change this year either.

Where is Trump’s proposal headed?

Goldwein explained that when the president puts forward a budget proposal, it’s just a policy statement that provides a sense of the president’s priorities. And there’s not usually an effort in Congress to actually enact large parts of it: It either ignores the proposal entirely or picks up pieces of it.

Gordon said this year is even less likely for Congress to act on any presidential proposal because before Trump unveiled his proposal, Congress passed a budget deal that raised spending caps over the course of the next two years.

The fact that 2018 is an election year also makes it less likely that the Senate and the House will try to pass a budget that they can agree on.

“That would be a very difficult political vote, and it seems like they are going to try to avoid that,” Gordon said.

Goldwein said a future Congress may enact some of the president’s recommendations, but it’s unclear when and how.

So what can student loan borrowers do?

Goldwein cautions future borrowers that college costs will likely continue to rise and at the same time, the government will likely have less money to subsidize higher education.

This is in part because the country’s debt keeps rising while its population ages. Therefore, a bigger share of the federal budget is set to go to interest payments and entitlement programs for seniors, Goldwein explained. Meanwhile, revenue will decrease due to massive tax cuts. On top of that, the Federal Reserve will likely keep increasing its short-term interest rates, and so student loan interest rates will tick up.

Gordon suggests concerned borrowers or future borrowers get politically involved.

“If their interest is in it, they should ask their member of Congress of that they think or what they think about this proposal, how they would change it and what it would mean for their constituency,” Gordon said. “I think that dialogue with their representative is important.”

You may want to check out our guide on paying for college or our guide to student loan forgiveness, as it’s still an available option.

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The Cost of Filing a Sexual Harassment Lawsuit, Plus Ways to Save and Fight

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Even in the era of the #MeToo movement, the picture is still rather bleak for victims of workplace sexual harassment who may not have the financial means to seek recourse.

According to a 2016 U.S. Equal Employment Opportunity Commission Task Force report, one in every four women have experienced sexual harassment at work. That number could be even higher. That number could be even higher.

Fearing that their claims will be ignored and their careers will be put in jeopardy, as many as 70% of sexual harassment victims choose not to come forward, let alone file legal claims against their abusers, according to Maya Raghu, director of Workplace Equality and Senior Counsel at the National Women’s Law Center.

In a Gallup poll conducted in the wake of the Harvey Weinstein scandal, some 42% of women said they had been sexually harassed.

As movements like #MeToo and Time's Up gain more traction, many more women are coming forward through various channels, and resources are being pulled together to help them battle perpetrators and unlawful practices.

The Gallup survey suggests that the #MeToo social media campaign has encouraged more women to take legal actions against the abuser: About 38% of the women surveyed said they were more likely to sue the perpetrator they believed had sexually harassed them. This is a much higher percentage than the same question garnered 20 years ago (18%).

However, a provision buried in the new 2018 tax law could possibly deter victims from taking legal action than before. In the past, victims could deduct the attorney’s fees from a settlement subject to a confidentiality agreement, so that the amount taxed is equal to the portion of the payment the victim keeps.

Under the current tax law, which was passed late last year, employees who settle sexual harassment lawsuits and agree to a nondisclosure agreement may no longer be able to deduct their legal expenses on their taxes. Instead, they would be taxed on the full settlement.

Sen. Robert Menendez (D-N.J.) proposed this amendment last November before the existing tax bill was signed into law. The proposal came in wake of the #MeToo movement, following a flurry of sexual harassment scandals from Hollywood to Capitol Hill. Legal experts say the provision that was intended to curb corporations from seeking confidentiality — an instrument to keep victims quiet — might have unintentional consequences on the victims’ end: The way the rule is written, it would have the same effect on plaintiffs in such settlements..

Anthony C. Infanti, a professor at the University of Pittsburgh School of Law who focuses on tax law, told MagnifyMoney the provision was written so broadly that other expenses related to sexual harassment claims could be deemed eligible for tax deduction.

For instance, he explained, women going to therapy to discuss sexual harassment subject to a confidentiality agreement may not be allowed to deduct such medical expenses from their taxes.

“It’s so broadly written that it’s not targeted at perpetrators and their employers, who seem to be the intended targets,” he said.

Infanti stressed that many victims may have legitimate reasons for wanting a nondisclosure agreement, whether it is to maintain a low-profile life when the perpetrator is a famous figure, or protect their career. If the price of agreeing to a nondisclosure would be a huge tax bill, this could well prevent from them going through all the grief associated with coming forward in the first place.

“To a certain extent you have to give some agency to the victims, let them also make decisions for themselves rather than having Congress make the decision for them about what they should or shouldn’t be able to do, what’s good for them and what’s not,” Infanti said.

Whether victims will be able to deduct fees from taxes is unclear right now. It’s up to the courts and IRS to interpret the provision. But this gives more reason for sexual harassment victims to seek ways to address the issues without having to suffer from devastating economic hardships.

Once you decide to seek justice, here are the steps you should take, and resources to take advantage of:

“The thing is there are some legal options, but they aren’t perfect,” Raghu told MagnifyMoney. “And it takes a while sometimes to obtain justice, and unfortunately there are no guarantees even for someone who manages to persist, who’s able to find an attorney. It’s very very difficult.”

1. Follow your employer’s reporting guidelines

First, you should look to see if your employer has a sexual harassment policy before reporting the incidents. The employer should conduct an investigation, which doesn’t always happen or isn’t always as thorough as it can be, Raghu said.

But it’s important to go through the internal procedure before seeking external assistance. Raghu said that’s because if someone eventually chooses to file a lawsuit, his or her employer can assert as a defense that the victim didn’t take advantage of the internal reporting procedure.

Read our guide to report sexual harassment at work.

2. File a complaint with the EEOC


Once an investigation is conducted, or the company doesn’t act, Raghu said the victim can go to his or her federal, state or local civil rights agency, and file a complaint citing discrimination. The EEOC is the federal agency that enforces laws against workplace discrimination. It has offices throughout the country.

Raghu said it is a prerequisite for the victim to file a complaint with the EEOC before filing a lawsuit, and the victim doesn’t necessarily need an attorney at this point.

What happens is that the EEOC will in many cases try to get the parties to come to some resolution without requiring a full-blown litigation. But if that doesn’t happen, the EEOC will investigate, asking the employer for a written answer to the charge. The victim will need to provide documents supporting the complaint, such as evidence of harassment and retaliation. The investigation is based on facts provided by both parties and additional information the EEOC gathers. The agency can either find the claim viable and can go forward with filing a lawsuit in court or they make a determination that the discrimination didn’t occur.

Sexual harassment is considered a form of sex discrimination that violates Title VII of the Civil Rights Act of 1964. If the EEOC determines that sexual harassment did occur after investigation, it will issue the victim a Right to Sue notice.

3. File a lawsuit

Once you have received the letter of Right to Sue, you can file a lawsuit under the federal anti-discrimination law. This has to happen within 90 days of receiving the green light from the EEOC. This is the time when victims need to work with an employment discrimination attorney.

4. Explore alternative options

Many victims may not have the financial means to take their employer or even an individual colleague to court and risk losing their case. Raghu acknowledges that few cases get to the point of trial or even a settlement. If you can’t find any legal defense funding and you still want to take action, you may want to come forward in public, Raghu suggested.

What we’ve seen in the last few months is that many victims have been talking openly about their experiences to the press and on social media, bringing the incidents to light without necessarily going through the legal process.

Catharine A. MacKinnon, who teaches law at the University of Michigan and Harvard University, wrote in a New York Times op-ed that the #MeToo movement is accomplishing what the law has not.

If you suspect the perpetrator has routinely harassed other people, maybe you can find allies in your company, or through former employees. Allegations of sexual harassment are being taken seriously as the social movements against predator behaviors run deep. You may feel more empowered coming forward as a group than battling on your own.

Just last week, 10 women signed a public letter accusing a Northwestern University journalism professor of sexual harassment and assault. The 10 former students of Northwestern’s Medill School of Journalism have received overwhelming public support from alumni and professors. The accused professor denied all the allegations, but will take a leave of absence while the case is being investigated by the university, according to the Chicago Tribune.

5. Prepare for the cost

To be sure, waging a legal battle against workplace sexual harassment can be a costly, time-consuming and mentally exhausting process. Victims may already have experienced substantial economic harms as a result of harassment in the first place. Many cannot afford legal representation, and very few cases get to the point of a trial or even a settlement unless they are representing themselves, Raghu said.

Raghu said some private attorneys may take on a sexual harassment lawsuit on a contingency basis, meaning that the lawyer would charge nothing — or sometimes they may ask the defendants to pay their costs — if you lose the case. On the other end, if the victim wins, the attorney would take anywhere from 20 to 50 percent of the money from a settlement or judgment.

Attorneys’ rates vary depending on the complexity of the case, the location of the attorney and the agreement between the plaintiff and the lawyer. But Raghu said those with a history of reaching larger settlements/judgments may charge a higher percentage for the case. In other cases, she said the lawyer may take a sexual harassment lawsuit on a partial contingency basis, requiring the client to pay for certain expenses, such as court filing fees, travel costs, etc., no matter whether they win or lose the fight.

If you are determined to pursue your rights through the legal system, there is legal and financial assistance available for victims. Here are some examples:

The National Women’s Law Center is the home of the TIME'S UP™ Legal Defense Fund, an initiative launched by women in the entertainment industry on Jan.1, 2018. Over $20 million has been raised to subsidize legal support for individuals who have experienced workplace sexual harassment and retaliation.

A screenshot of the TIME’S UP website.

When victims seek assistance, Raghu said the center connects them to a network of attorneys who will take their case for a reduced fee, or in some cases, pro bono. Depending on circumstances, their cases may be eligible to receive support by the TIME'S UP™ Legal Defense Fund. But there’s no guarantee of representation, Raghu adds.

NWLC’s Legal Network for Gender Equity, launched last October, now has 530 attorneys across the country. It has received almost 1,500 requests for assistance from workplace sexual harassment victims, Raghu said.

Equal Rights Advocates (ERA), a national civil rights organization based in California, defends laws that prohibit sex-based discrimination, and advances gender equality in the workplace partly through representing women in lawsuits. For more information or referrals, contact Equal Rights Advocates.

6. Weigh the pros and cons of signing a nondisclosure agreement

As the new tax law is currently written, people who decide to settle a sexual harassment lawsuit and sign a nondisclosure agreement may no longer be able to claim their legal fees as a deduction on their taxes. This was one way that plaintiffs could formerly offset the taxes they would likely have to pay on the settlement amount.

Infanti said the court and the IRS will be the final interpreters of the new provision under the tax law when such cases appear. At this stage, he said, there is not much that sexual harassment victims who may want to seek a confidentiality agreement can do besides put pressure on their state representatives to amend the law.

Potentially, employees may choose to change what type of claims they are pursuing in order to avoid a huge tax bill.

For example, “if you are a woman of color, you may be experiencing sexual harassment but also racial harassment, or racial discrimination or national origin discrimination that are all related,” Raghu said. “Or maybe there are sex discrimination claims that are not sexual harassment, for example.”

Raghu said all related information can be incorporated into the strategy when attorneys are litigating these cases or trying to negotiate a settlement agreement for the victims. If there are multiple claims other than sexual harassment, perhaps a settlement could be structured in a way that separates the allocation of the settlement from those other claims, so that the related attorney's fees aren’t taxed, according to Raghu.

In any case, this is even more of an incentive to find a qualified attorney knowledgeable in cases of sexual harassment or discrimination who can craft the right strategy for your situation.

7. Know the risks

Reporting sexual harassment comes with potential dangers, which have prevented so many from coming forward. Raghu advises victims to consider a few things before taking action:

  1. Understand what sexual harassment is. A December Reuters/Ipsos poll found that Americans hold very different views on sexual harassment. The EEOC defines sexual harassment as unwelcome sexual advances, requests for sexual favors, other verbal or physical harassment of a sexual nature, as well as offensive comments based on gender, which don’t have to involve sex. Sexual harassment occurs when it creates a hostile or offensive work environment, or when it leads to someone’s unemployment or demotion, according to the EEOC. Learn more about sexual harassment from this NWLC guide.
  2. Don’t be surprised if the employer dismisses your complaint or simply doesn’t believe your account. You may experience retaliation, which has deterred many women from coming forward. Retaliation comes in various forms that include firing, demoting and cutting salaries of an employee who filed a sexual harassment complaint. Retaliation is illegal but happens frequently. In 2013, roughly half of all complaints filed with the EEOC were retaliation allegations, with 42 percent of findings of discrimination based on retaliation, according to the agency.

Therefore, for practical reasons, you should:

  1. Document evidence of harassment, infractions, retaliation, correspondence with your supervisor and the human resources department.
  2. Start looking for other employment while trying to obtain justice. You can reach out to co-workers and former colleagues, and network with your industry contacts for job opportunities.
  3. Start putting money aside in case you have to leave the company as a result of retaliation following your harassment accusation. It is critical that you have a financial cushion to fall back on when you need to move on in your life. Generally, three to six months’ worth of necessary living expenses should be able to navigate you around job loss.

Check out this list of resources put together by the NWLC:

Federal Agencies
Department of Education Office for Civil Rights
Department of Health and Human Services Office for Civil Rights
Department of Labor
Equal Employment Opportunity Commission

General Resources

Finding an Attorney
American Bar Association
National Bar Association
National Employment Lawyers Association
Directory of Local Bar Associations

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Here’s How the GOP Might Finally De-Fang the CFPB

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Update: The Consumer Financial Protection Bureau on Monday released a new five-year strategic plan, outlining a less aggressive approach to its mission of protecting consumer rights.

The consumer watchdog revised its mission and vision for 2018 through 2022. Under the new mission, the CFPB will be “equally protecting the legal rights of all,” including consumers and big financial institutions the bureau regulates.

"If there is one way to summarize the strategic changes occurring at the Bureau, it is this: we have committed to fulfill the Bureau’s statutory responsibilities, but go no further," said the federal agency’s acting director Mick Mulvaney, in a press release.

Refocusing CFPB’s mission is in line with a spade of drastic changes to the bureau under Mulvaney, who was tapped by President Donald Trump to take the helm at the federal agency in November.

The CFPB had already had quite a few eventful weeks prior to the memo. Or, according to critics and consumer advocacy groups, it had endured a flurry of "assault" launched by Mulvaney.

In the past few weeks, Mulvaney has: 

  • Requested $0 in quarterly funding from the Federal Reserve, instead, saying it would make do with dipping into its reserve fund.  
  • Issued a call for public comment on its enforcement, supervisory, rule-making, market monitoring and education activities. 
  • Wrote to the CFPB staff in a memo that the agency will have a more limited vision.  

Meanwhile, the CFPB, under Mulvaney, has: 

  • Dropped a lawsuit against four online payday lenders whom the CFPB alleged in its original complaint had preyed on working families by making loans with interest rates up to 950%.  
  • Announced it would “reconsider” federal restrictions on payday loans. 
  • Announced a yearlong delay to the effective date of a 2016 prepaid rule that would have protected prepaid cardholders.  
  • Dropped a four-year investigation into World Acceptance Corporation, a payday lender, from which Mulvaney has received $4,500 in campaign contributions in the past. 

The moves show that Mulvaney, as expected, is actively seeking to overhaul the consumer watchdog. MagnifyMoney interviewed several experts, who all say this trend of reversing rules, dropping investigations and limiting the mission of the consumer watchdog will continue. 

Yet it’s not all bad news. After a long-fought legal battle, the CFPB won a major court victory this week. In a case questioning the constitutionality the CPFB, the Court of Appeals for the District of Columbia Circuit reversed its own decision that ruled it unconstitutional in 2016.

Conservatives have long decried the independent nature of the agency and its sweeping level of oversight in the financial sector, which includes the freedom to write new rules and regulations in the interest of consumer protection.

What’s at stake? 

The CFPB is a U.S. government agency responsible for establishing consumer protection regulations and regulating key parts of the financial sector, such as the mortgage and debt collection industries. It was established in the wake of the 2008 financial crisis as a centerpiece of the Dodd-Frank Wall Street Reform and Consumer Protection Act. 

The agency has zealously targeted bad actors in the financial industry since its creation, reclaiming nearly $12 billion for more than 29 million consumers. Its latest high-profile actions included fining Wells Fargo in the unauthorized accounts scandal and creating new rules around payday lending. It has also rolled out new regulations in the mortgage, credit card, debt collection and prepaid card sectors.  

The Trump administration and Republicans have long sought to curtail the CFPB’s power as part of a broader effort to lighten federal regulation over financial institutions.    

Richard Cordray was the agency’s first director, holding office from 2012 until he announced he was cutting his tenure eight months short at the end of November 2017. He had been criticized by Washington conservatives but well-received by Democrats and consumer advocates.  

Mulvaney, head of the Office of Management and Budget, took over the bureau in a drama that unfolded into a lawsuit. The fight over who is the legal boss of the bureau is still ongoing 

A former South Carolina representative, Mulvaney had said in a 2014 interview with the Credit Union Times that the CFPB was “a a sick, sad kind of way.” In 2015, he co-sponsored a legislation to eliminate the agency.  

How the GOP could dismantle the CFPB 

Legislative action … not likely 

Last year, the GOP tried to pass the Financial CHOICE Act, which would have repealed the Dodd-Frank Act and, along with it, the CFPB. The bill passed the Republican-led House in June along party lines, but didn’t make it to the Senate. 

Republican supporters of the act claimed the Dodd-Frank Act was unnecessary. Meanwhile, legal experts said deregulation would pose systemic risk, negatively affecting financial reform. 

Jim R. Copland, legal director for the Manhattan Institute and a critic of the CFPB, told MagnifyMoney eliminating the agency completely would be difficult under the current Senate structure. 

“Without 60 votes you cannot get ordinary things through the Senate,” Copland explained. “And neither party seems willing to compromise with the either on most legislation.” 

Copland added that an unusual case would be for the Supreme Court to strike down some elements of the CFPB, forcing the Congress to restructure the agency. But he thinks it’s unlikely to happen given the court has been hesitant to do so with Obamacare. 

Melissa Stegman, senior policy counsel on the federal policy team of Center for Responsible Lending, a nonprofit, nonpartisan organization based in Washington, D.C., said she thinks legislative action to get rid of the CFPB is “extremely unlikely.”  

“My impression is that there isn’t even much of an appetite to do that legislatively, because Mulvaney is already doing it through the administrative process,” she said. “They don’t even really need to purse anything externally. It’s like a self-sabotage as opposed to having the sabotage coming from the Congress.” 

Death by a thousand paper cuts 

Indeed, there are plenty of administrative maneuvers to scale back the bureau, which is well underway. It’s clear Mulvaney is already utilizing this strategy, given the small ways he has already scaled back the agency’s operations.  

He has support from Republicans on Capitol Hill as well.  

In late October, Senate Republicans killed an arbitration rule that the consumer watchdog wrote, which would have made it easier for Americans to file class-action lawsuits against big financial institutions. The treasury department had released a report against the rule in an unusual move the day before.  

“The administration can’t get rid of an agency constructed by the Congress, although they certainly can change the focus and direction of an agency,” Copland said. “I think that’s happening. At least once they get their nominee in place.” 

Stegman pointed out Mulvaney’s appointment itself is a backdoor way to overhaul the bureau. 

Freshly appointed in November, Mulvaney announced a 30-day hiring freeze at the CFPB and an immediate halt on any new regulations, rules and guidances. 

In a Jan. 24 memo to the CFPB staff, an adapted version of which was published in The Wall Street Journal, Mulvaney said he had no intention of shutting down the bureau, but the agency will have a different mission under his leadership. 

“We will exercise, with humility and prudence, the almost unparalleled power Congress has bestowed on us to enforce the law faithfully in furtherance of our mandate,” wrote Mulvaney. “But we go no further. The days of aggressively ‘pushing the envelope’ are over.” 

Mulvaney’s deregulatory agenda has critics on guard. 

“He’s made public comments [that] he sees his constituency and the people that he cares about equally as corporations and consumers, which is completely counter to the CFPB’s mission to specifically protect consumers,” Stegman said. ”That’s really concerning.” 

Under Mulvaney, Stegman expects cases that may have been under investigation to be dropped, and changes be made to rules that already have been made final. 

For instance, the Home Mortgage Disclosure Act, a 2015 rule expected to assess trends in mortgage lending and originations, ensuring that companies follow the laws, was announced to be reopened last December. 

Stegman said concerns have also risen that CFPB’s Consumer Response Database, a public database that stores more than 1 million complaints about financial products and services since 2011, may go private. 

Besides the CFPB’s research agenda possibly dramatically shifting, Stegman worries that pending CFPB rules — such as on erroneous debt collections or exorbitant overdraft fees — will “never see the light of day or be harmful for consumers.” 

“It’s not a priority for Mulvaney,” Stegman said. “So he’s not gonna pursue this.” 

This story has been updated. It was originally published Jan. 31, 2018

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A Beginner’s Guide to Monetizing a Hobby

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Making extra money from a side hustle can be extremely gratifying, especially if it’s something you love doing.

And it seems like it’s never been easier to pick up side gigs or monetize your hobbies. There are 57.3 million freelancers in the U.S., according to a 2017 survey commissioned by the Freelancers Union and Upwork, up from 53 million a couple of years ago. In 2017, they collectively earned $1.4 trillion.

Make no mistake: Hobby-based businesses can become big undertakings. Juggernauts such as Facebook, Chanel and Microsoft all have roots in personal hobbies.

The Panel Study of Entrepreneurial Dynamics II, a multiyear survey of nascent entrepreneurs, found that nearly 26% of budding U.S. entrepreneurs started their businesses from a hobby.

But turning your hobby into a business can get complicated, to the extent that it could kill your passion for it. It is, in the end, a commitment that requires hard work. With proper planning, you may be able to strike the right balance of success and satisfaction from monetizing your hobby.

Learn the essentials

We asked career experts and hobbyists-turned-business owners to share their advice and the lessons they learned about starting hobby-based businesses, to help you start off your endeavor right.

Do research, assess your goals

Benjamin Warnick, a professor of entrepreneurship and strategic management at Washington State University, told MagnifyMoney that once you add money into the equation, a hobby isn’t just about personal enjoyment anymore; it morphs into a business that needs to create value for customers.

“People aren’t going to pay you just to do something you enjoy,” Warnick said. “If you can find a way to identify what people value — [Ask yourself] ‘How can I make life better for them in some way and how can I tie my hobby to that?’ — then you are on to something.”

Anna Juhl, a former nurse manager, quit her job at age 52 to pursue her passion for cheese and travel, but she did so carefully. Juhl now runs a business called Cheese Journeys, offering cheese enthusiasts tours in European and American destinations. She didn’t act on impulse; she had a plan.

Anna Juhl in England on a scouting trip in preparation for her first cheese tour. (Courtesy of Anna Juhl)

Juhl, who ran an artisan cheese shop and restaurant in Salt Lake City back in 2000 after working her full-time job as a nurse manager, did her homework before piloting a cheese-themed tour to Europe in 2013. She knew that food travels were on the rise. And she was confident that and her expertise in artisan cheese and love for food and travel would give her an edge in the market.

When her husband’s job led them to New York in 2007, it was a good opportunity for her to leave behind her previous career, and Juhl started brainstorming a cheese-travel business. During the first six months, she found herself spending hours reading up on food, travel and everything she needed to know about running the business. With help from industry experts in Europe, who coached her through the basic tour process, she launched a pilot England tour in 2013, 15 months after quitting her job.

Juhl said she was lucky that she was able to pilot the business with her own savings instead of taking out loans. She had to cover a considerable amount of money upfront, and she lost money in the first couple of tours. The fact that her husband has a good-paying finance job also helps, although Juhl admits that the switch to full-time entrepreneur was not without stress: She didn’t take a paycheck for a few years and any money she made was invested back into the business.

Then again, Juhl’s initial goal was not to make profit, she said; rather, her new business was a transition into retirement. She was prepared not to make a profit the first few years as she worked toward building a business that would allow her and her husband to travel while having a steady stream of income at retirement.

Looking back, Juhl said self-assessment really helped her focus in this midlife career shift.

“Know what you want from it, how much do you want to work and set your own goal so you build a business that meets your goals and not the expectation of somebody else’s.”

Indeed, entrepreneurship demands a big-time commitment. The word “passion” has its roots in Latin, meaning suffering, Warnick pointed out, so hobbyists need to ponder how much they are willing to sacrifice before launching their leisure-based business.

Start small, test it out

Nancy Collamer, career coach and author of Second-Act Careers, told MagnifyMoney that it’s wise for hobbyists to start testing out businesses as a side gig in their free time.

“Let’s say you are great at baking,” said Collamer. “What you may want to do is just on a very small scale, offer your brownies for sale during the holidays to some friends.”

A side hustle allows you to gauge the market interest and to test out pricing, she said. Once you have a taste of it, put a little more time into the work than you would on a hobby basis. If it doesn’t feel right, stop right there before you waste too much money or time on it.

“Keeping one foot in stable employment can really help ease the transition,” Warnick said. “So if you have alternative sources of income, especially in the early stage of the business, you can explore and then gradually scale up the business, instead of putting tons of money into it and then realizing it’s not going to work.”

Expect challenges

You may be excellent at what you love to do, but a business is a business. When you try to commercialize your expertise, there is a lot more work that goes into the process than you would probably have expected.

“That’s everything from marketing your services to keeping your books to producing your products, to finding the cheapest materials, to keeping your office clean every day,” Collamer said. “You are doing it all.”

The business side of the hobby entrepreneurship — bookkeeping, accounting, digital marketing — can be really daunting.

“Curating, researching and building the tour, that was easy,” Juhl admitted, “Executing the tour, super fun. Doing all the other related business things can be challenging.”

Gianna Leo Falcon, a New York-based freelance photographer, told MagnifyMoney the learning curve was very steep for her, a person who’s not quite business-oriented.

Gianna Leo Falcon, a New York-based freelance photographer. (Courtesy of Gianna Leo Falcon)

Prior to becoming a professional photographer in 2015, Falcon did occasional freelance portraits and headshots. She recalls constant frustrations with clients who booked shoots but ended up not showing up. To protect herself, Falcon later learned to ask for down payments.

“I’m really an artist. I just want to show up and shoot,” she told MagnifyMoney. “Invoices and how to get paid online are really confusing. I’m navigating and learning that stuff as I go along.”

Outsource labor if needed

Experts say being your own boss not only requires possessing a variety of skills and knowledge of the business but also knowing your own strengths and when to outsource some of the labors you have no interest in or talent for.

“You don’t have to be able to do everything,” Warnick said. “So if you got the expertise in the domain of your hobby, maybe you could bring on someone who’s a little bit more of the business side who can help you commercialize the hobby.”

As Juhl’s business has grown, she hired a bookkeeper, a website developer and a publicist so she can focus on the centerpiece of the business — booking and executing the trips.

“It’s a personal relationship that I have with people who travel with me,” she said. “So I have to make sure that I’m available to do what my role is, really what I’m best at.”

Find your clients

For any business to succeed, you need to find people to buy your services. But where do you start? Here are a few ideas.

Find complementary service providers

A good place to start is networking with complimentary service providers, Collamer said.

For example, if you want to be a wedding photographer, find other people who offer wedding services, Collamer suggested.

“They are going to be thrilled to meet you,” she said. “Because if it’s someone who has a wedding venue and they meet with couples, you might become one of their preferred service providers and that becomes a steady stream of clients for you.”

Get involved in trade groups and associations

There are established associations and trade publications within almost every hobby, be it specialty foods or heavy machinery. Get involved with those communities because they might have information and resources you need to grow your business. Better yet, they may be able to refer you to potential clients.

“Don’t think you need to reinvent the wheel,” Collamer said. “There are lots of people who are already probably [having] successful businesses that are related to what you want to do that you can learn from.”

Prioritize marketing

Juhl said she had a hard time finding customers when she started her cheese-travel business until the marketing and media support came in much later.

A year into the business, she realized that relying solely on word of mouth was not enough to attract customers; marketing should be a crucial piece of a business plan. Juhl eventually joined American Society of Travel Agents and other travel organizations so she could network and gain credibility. Through the association, she worked with agents who took on the responsibility of booking the international cheese tours. She sells the tours at an average $6,000 per person, and the travel agent charges a 5 to 10% commission. Soon after she started working with an agent, a group of semi-retired food and travel enthusiasts booked her trip.

In addition, she has hired people to help with website development, marketing and media relations.

Each year, she also budgets for a renting booth at large industry conferences where her potential guests attend. Those efforts come with thousands of dollars of additional travel expenses, booth rental fees, hotel, food and registration costs, which have become necessary overhead, and she has to include them into the monthly budget. But she said they are absolutely worth it.

In Falcon’s case, she is a full-time contractor for a wedding service that operates in several locations around the country and specializes in digital marketing. Falcon works as the company’s New York liaison and photographer. The firm brings her a steady stream of clients, which frees her up from the marketing piece of the puzzle. By booking clients for her, Falcon said the company takes a substantial cut from each project payment. Falcon said she could potentially earn more if she worked for herself, but she admits that booking is hard work, and she is grateful that someone else is doing it for her.

If you are looking to seriously grow your freelance gig and want your name out there, you may want to educate yourself about social media and digital marketing. That said, don’t get hung up if you are uninterested in this sort of things or simply don’t have time for them. It may be worthwhile to hire a marketing professional who specializes in your industry.

Find a place to sell your hobbies

Whatever service you offer, it’s critical to find an avenue where you can commercialize your hobby. Booming e-commerce makes it easier than ever to do so. Third-party platforms can relieve you of the hard work of finding buyers, but the trade-off is that they take a commission of what you earn.

For artists and crafters, if the idea of creating a website and learning digital strategies freezes you, marketplaces such as Etsy, Amazon and eBay may be a good fit.

The downside is that those places take a cut from your listings and transactions. For instance, Etsy charges a $0.2 listing fee for each item and a 3.5% transaction fee on sales.

Although the marketing task is off your hands when you sell your items through a marketplace, you also face competition from thousands of other sellers. Compared with the full control you would have over design, marketing and SEO with your own website, you have less freedom on those fronts with a third-party platform. You will be subject to those companies’ policies and rules.

If you have in-demand services to offer — anything from writing and web design to bookkeeping and accounting — third-party platforms like Upwork, Freelancer, TaskRabbit will be of help. Again, you have to somehow offset the time and effort saved from finding clients. The three services charge a 3 to 30% service/project fee.

And don’t forget the oldie but goodie Craigslist, where Falcon snagged her current contractor job.

Figure out your rates

It may be a bit strange to tie money into the things that you love to do, but knowing your market value is extremely important if you hope to profit off your passion.

The hobby community you are in is a great resource for you to find out the average fees. If you don’t feel comfortable asking about rates, there are tools available online to help you figure out the value of your time.

A screenshot of website

BeeWits, a project management software company, has released a freelance rates calculator. Similarly, this website by, a Norwegian online marketplace for classified ads, helps users figure out how much their spare time is worth.

Writers and journalists may want to check out The Freelancer’s rates database, where freelancers can add what they’ve earned for certain projects for a variety of publishers.

Watch out for these common missteps

Assuming other people will enjoy your hobby as much as you do

“It’s easy to think, ‘Oh, I love yoga. Why wouldn’t everybody love yoga?” Warnick said.

Guess what? Others may not care for it. This is why you need to do your market research and figure out if there is demand for your passion.

Trying to do everything

Collamer said often when people try to do everything themselves, they end up spending too much time daunting over overwhelming tasks that they are uninterested in. But really, they should outsource labor when they are able to.

“The key of building any business is to know when you reached a level where you need to call in help to ensure that you don’t burn out and that you can manage all the aspects of what you do well,” Juhl said.>

Not thinking like an entrepreneur

Your hobby might be something that you really enjoy today, but once you decide to commercialize it, be prepared to tackle the not-so-exciting work.

You need to educate yourself about everything from the zoning regulations in your particular town, business registration, marketing, taxes and everything else that comes with running a business, Collamer said. “It’s not all going to happen automatically.”

Going all in at the beginning

Before establishing yourself as an entrepreneur, it may not be wise to you quit your job and jump into your business all at once because it may not be a good fit for you.

Running a business is a big commitment, both in terms of your time and finances. Juhl and Falcon both had other streams of income or savings to support themselves while they built their hobby-based businesses. Juhl’s cheese tours weren’t profitable for the first couple of years. Falcon said it took her a good five years to solidify herself as a photographer while working other jobs.

Don’t forget about taxes

Running your hobby business may come with lots of uncertainties, but taxes are certain.

Mark Luscombe, principal analyst at Wolters Kluwer Tax & Accounting, told MagnifyMoney that people who made money off hobbies used to be able to deduct related expenses within certain limits, yet under the new tax law, expenses related to a hobby won’t be deductible at all. Luscombe said this makes it logical for taxpayers to treat a hobby as a business.

Luscombe urges freelancers or contractors to keep separate records of all the income and expenses related to the business. If part of your home is dedicated for business purposes, for instance, a home office or a kitchen exclusive for producing items for sale, you need to allocate the square footage used. That is, dividing the space used for the business by the total square footage of the house, and that would be the percentage of expenses, such as insurance and utilities, that you can allocate and deduct from your taxes.

Under the new law, pass-through business owners can deduct up to 20 percent of their qualified business income from a partnership, S corporation or sole proprietorship.

Individuals earning less than $157,500 ($315,000 for married couples) are eligible for the fullest deduction. So if you’re going to make money off your hobby, Luscombe said this new benefit is another reason to try treat it as a business.

If you are running a business on your own, you’re most likely seen as a sole proprietorship owner for tax purposes. You will have to report business-related income and losses on a Schedule C (Form 1040) each year, Luscombe said.

If you made more than $600 from any particular client, you should expect to receive a Form 1099-MISC. Likewise, if you paid anyone at least $600, you will have to issue the same form. For more information on how the new tax law affects small-business owners, check out our guide on the topic.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

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Shen Lu is a writer at MagnifyMoney. You can email Shen Lu at

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How to Make the Most of MoviePass, a Great (but Glitchy) Deal for Film Lovers

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

moviepass home page
Screenshot of the MoviePass website.

It seems that all of a sudden all my friends got MoviePass, a subscription service that allows users to purchase one movie ticket per day for a flat monthly fee of less than $10. That’s cheaper than a single admission at some theaters!

I’m not a frequent moviegoer, but I was immediately sold, thinking it was a good deal even if it could get me through the awards season.

Three weeks in, I have to say, MoviePass is indeed a great deal when it works, but the service got me on edge when it didn’t work quite well: The app is glitchy, and its customer service is lacking — when there is any.

A rocky start

The first red flag popped up nine days after I joined MoviePass and paid my first-month subscription fee. I received an email from my MoviePass Concierge notifying me that my card should have arrived, but it hadn’t, and the company had provided me no shipping information.

The message included a link so I could report that I had not received my card — but it didn’t work. Three days later, I sent an inquiry asking about the shipping status of my card via the MoviePass app’s chat feature. I received no response. I then sent a ticket to its support center online. Silence. Meanwhile, I could not find a customer service line on the MoviePass website.

The MoviePass app, by the way, is slow and clumsy, and the GPS location finder doesn’t always work. It lets you check in for movies outside its allowed distance — 100 yards — from a theater.

My card finally arrived four days after the email said I should’ve received the card, to my excitement.

I scanned through the three-sentence instruction that came with the card, checked for available movies on the app and decided to go to a member theater, an AMC Loews in Manhattan, for the 6:15 p.m. showing of “Three Billboards Outside Ebbing, Missouri.”

I didn’t notice the fine print below the check-in button saying I had to be within 100 yards of the theater to actually check in, but the app still allowed me to do so from my office, 0.4 miles away from the theater. No error message popped up.

When I arrived at the theater, my MoviePass, essentially a MasterCard debit card that’s supposed to be loaded with the money for a ticket upon checking in, didn’t go through at the kiosk. The message on the app was telling me I had already purchased a ticket that day.

moviepass app
Screenshot of the MoviePass app after I checked in too early for the movie.

That’s when the cashier told me I was supposed to swipe my card within 30 minutes after checking in on the app at the theater. The instructions I received with my card said nothing about the 30-minute time frame. Dumbfounded, I paid out of pocket for the ticket. The cashier assured me that if I contacted MoviePass, explaining the situation, they’d refund me for the ticket.

“We’ve had a lot of issues with MoviePass lately,” she shrugged. “You get what you paid for.”

Wait a minute. No, I didn’t get what I paid for — I had to pay out of pocket for a movie ticket, on top of my subscription.

The instructions that came with my MoviePass card.

Before the movie started, I contacted the support center via the app, attaching my receipt and screenshot of the message on the app. I also sent in an inquiry via email, to no avail.

At this point, I was worried I was involved in a scam, but I decided to give it a second chance. Before trying the service for the second time, I carefully read the detailed instructions on the MoviePass website.

This time around, my card went through at the kiosk at a different theater after I used the app to check in on the spot. I was thrilled. At the same time, I was frustrated with my MoviePass experience when I had run into trouble, and it turns out, I wasn’t the only one.

Why is it so glitchy?

I ran into a fellow MoviePass holder at the second movie theater, who asked if it was the first time I was using it. I replied, “First time using it the right way.” He then went on to complain that he’d never heard back from its tech support team when he reported an issue.

I later tested the app for a third time. Knowing that I shouldn’t be able to, I once again successfully checked in from my office at the movie theater 0.4 miles away. And when I tried to cancel the purchase, the app wouldn’t let me, despite the fact that MoviePass allows you to change your mind after checking in. Even more strangely, a different movie appeared in my movie-watching history than the one I’d actually picked.

Curious if these issues were widespread, I went to the MoviePass Facebook page and its support center page, only to find they were flooded with complaints from customers who also experienced late arrivals of cards, billing and technical issues and unresponsive customer service.

In an open letter to users in August, the company explained it had seen an overwhelming increase of members that month, when it dropped the monthly fee to $9.95 from $39.99.

“An unprecedented volume of traffic” caused its system to crash, the letter reads. The issues, in turn, significantly increased incoming inquiries for assistance.

Indeed, interest in the service skyrocketed since the price adjustment. The number of MoviePass subscribers reportedly jumped from about 20,000 in early 2017 to 1.5 million as of January.

In particular, MoviePass says its membership went from 1 million to 1.5 million in a month, from December to January, a result of the company’s partnership with Costco, whose members can get a yearly deal with MoviePass for $89.99. Gabriel, a MoviePass customer support member, told me this when I called the customer line for Costco members. (I am not a Costco member, but someone posted the number on Facebook so I tried it.)

Although MoviePass has tripled the number of its support staff over the past month, they still couldn’t keep up with the demand, Gabriel said. He wouldn’t provide his last name when I asked to interview him about the issues.

“We are really happy to have so many customers,” Gabriel told me after he finished handling my refund request. “Unfortunately we just don’t have enough people at this time, but we are hiring as fast as possible. We are doing everything we can to try to prevent that from happening in the future.”

How to correctly use MoviePass

It seems that it may take a while for the company to fully staff its customer support team. We put together a step-by-step user guide with important notes, hoping that you will avoid some common mistakes and make the most out of the service without having to contact MoviePass.

Step 1: Order a MoviePass card

Download the MoviePass app from the App Store or Google Play Store. You will be asked to enter your address and credit card information upon registration. You can also sign up for the membership online. MoviePass charges your first monthly subscription fee upfront. MoviePass says your card should arrive within five to seven business days. But based on my experience and the experiences others shared online, it could take longer.

Step 2: Activate the card

My card came activated, but you may need to activate yours when it arrives in the mail. Follow the steps listed here.

Step 3: Use the card

  1. Find showtimes in your area by entering your ZIP code on the app.
  2. Pick a theater where you want to see a particular movie.
  3. Go to the theater with your MoviePass card. Choose the showtime for the movie on the app. Click “CHECK IN” to buy your ticket.
  4. The screen then shows, “SUCCESS! Go purchase your ticket.”
    If you accidentally picked the wrong movie or showing, click “Sold Out? Change Mind?” at the bottom. It didn’t work for me the first time I tried, but it allowed me to cancel a different purchase a few days later. Given my hit-and-miss experience, I’d advise you use the app with extra attention to details to make sure you get what you want.
  5. Swipe your card at the kiosk or a ticketing machine to purchase your ticket. Your MoviePass will be activated for 30 minutes for the purchase after you check in on the app, so don’t wait too long to buy your ticket.

A few things to note

  1. You can only see 2D movies with MoviePass.
  2. You can use MoviePass to see as many movies as you like in a month, but you can only see one per day. And you can only purchase a same-day ticket.
  3. You have to check in at the movie theater — you can’t book a ticket in advance at home. MoviePass may not work if you want to see a newly released box hit that may be sold out by the time you get to the movie theater. For big releases, you may have to arrive in the theater earlier to lock the ticket in for a later showing.
  4. Not every theater accepts MoviePass. The company claims MoviePass is accepted at more than 91% of theaters — more than 4,000 — nationwide. Check the theater map to make sure its service is available in your town before you sign up for it.

If you still have questions...

MoviePass recommends members use the real-time chat feature on the app or submit an email inquiry through its website. As I noted before, I had no success either way.

Head to the MoviePass Support Center online. On this page, the company lists answers to  common-user questions.

Gabriel said the company hasn’t set up a direct service line open to all customers yet; it’s work-in-progress, but Costco users can call 1-855-336-3632 for help, which I used, despite not having a Costco membership. The call center greeting message says it’s a MoviePass customer service line, not a line specifically for Costco members.

When I called it a week after my first call, another customer service worker named Jason said MoviePass had disabled the number when subscriptions skyrocketed, because the call center wasn’t able to take care of the flooding inquiries. Although the number is not listed on the MoviePass website nor on the app, Jason said the team is indeed taking MoviePass subscribers’ questions as the company beefs up the staff. MoviePass did not respond to an email request from MagnifyMoney seeking to verify the number as an official customer service line.

My refund was processed immediately when I called in, to my surprise. (Disclosure: I explained I was working on an article about MoviePass after customer service resolved my personal issue.) To add another level of complexity, I initially received a refund of $0.15, instead of the $15.19 I paid for the ticket, which prompted another call to the MoviePass customer support center.

MoviePass expects its membership to rise. It better speed up the hiring process!

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Shen Lu
Shen Lu |

Shen Lu is a writer at MagnifyMoney. You can email Shen Lu at


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Ranked: The Best Finalists for Amazon’s Newest Headquarters

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Pittsburgh topped our rankings for the best city for Amazon's next headquarters, tying Raleigh, N.C. for first place.

Amazon finally narrowed the list of candidates to host its second headquarters down to 20 on Thursday.

The 20 finalists were picked from 238 cities from across the United States, Canada and Mexico to host what Amazon calls HQ2, a new facility that it expects to create 50,000 jobs. On top of that, the company estimates it will invest more than $5 billion in the city it ultimately chooses.

Amazon has been transparent about what it’s looking for in a potential headquarters — focusing on factors like the area’s proximity to airports, major highways and the city’s population center.

But which of the 20 cities is really going to offer those 50,000 employees the best quality of life?

MagnifyMoney researchers decided to do an analysis of the cities on Amazon’s HQ short list to determine which cities are the best to live in. We not only wanted to see which of these 20 cities offered a decent cost of living and relatively affordable housing, but also key quality of life factors like weather and the average commute time, and whether the housing stock has slack to support an influx of jobs.

The cities were rated on a scale of 100, based on these seven factors. Those rankings were summed and divided by seven for a highest possible score of 100 and a lowest possible score of zero.

  • Average commute time (in minutes)
  • Median monthly housing costs
  • Cost of living index (non-housing)
  • Temperate climate, as measured by the difference between the highest and lowest average temperatures across twelve months (a lower range ranked higher)
  • Marginal income tax rate for a single filer earning $100,000 in taxable income (state, federal and city)
  • Vacancy rate of rental homes
  • Vacancy rate of owner-occupied homes

“We trust that Amazon is doing a great job of evaluating (and negotiating) the core criteria and key preferences they deem essential to their business operations,” said study author Kali McFadden, an analyst at LendingTree, the parent company of MagnifyMoney. “We wanted to take a closer look at what each of these cities can offer their rank and file employees, both local and transferred.”

The best possible Amazon HQs: Pittsburgh and Raleigh

Let's start with the top three. MagnifyMoney gives Pittsburgh and Raleigh a tie for first place, both scoring 78 points.

Pittsburgh topped our rankings for the best city for Amazon's next headquarters, tying Raleigh, N.C. for first place.

Overall score: 78 

Pittsburgh combines a low cost of living with a decent commute time of just 26 minutes. Bring a jacket. The weather is on the chilly side.

  • Monthly median housing cost: $791
  • Avg. commute time: 26 minutes
  • Climate: Between the hottest and coldest day, there was a difference of 46 degrees

Overall score: 78

  • Monthly median housing cost: $1,051
  • Avg. commute time: 26 minutes
  • Climate: Between the hottest and coldest day, there was a difference of 38 degrees.

Dallas came in at no. 3.

Overall score: 69

  • Monthly median housing cost: $1,096
  • Avg. commute time: 28 minutes
  • Climate: Between the hottest and coldest day, there was a difference of 39 degrees.

The worst of the top 20 contenders

New York City is the lowest-ranking finalist on the MagnifyMoney list, scoring poorly at 22. The Big Apple fell to the bottom of the pack for three key reasons: it has the highest living costs, highest marginal tax rates and longest commute time.

Northern Virginia and Montgomery County share the second-to-last place with a score of 29.

Interestingly, the current Amazon headquarters Seattle, only earned a score of 41 points, but we didn’t include it in the official rankings. Seattle would have been ranked in the 14th place if we had.

Full rankings:


The data was gathered on the Metropolitan Statistical or Combined Statistical area for a city, except in the cases of Northern Virginia; Montgomery County, Md.; and Washington, D.C., as these finalists are, at least partly, part of the same statistical area.

County data was used for commute times and median monthly housing costs (county data was not available for the other factors). Similarly, county data was used for Newark, N.J., where available, because it is part of the New York City (another finalist) statistical area.

The U.S. Census American Community Survey (2016) was used for commute times and median housing costs, while the Census Housing Vacancy and Ownership data was used for vacancy metrics. Statistics Canada was used for Toronto data. Federal and local tax authority rate tables were used to derive marginal income tax rates for $100,000 in income.  Weather data was derived from and The Weather Network, while cost of living index data was sourced from

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Shen Lu
Shen Lu |

Shen Lu is a writer at MagnifyMoney. You can email Shen Lu at


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10 Money Rules to Break in 2018

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.


When it comes to personal finance, you’ve probably heard all types of “rules of thumb” to follow. Yet the painful truth is that there is no one-size-fits-all rulebook for financial success.

These rules are good places to start. However, blindly following them won’t lead to satisfying results. The future is unknown and every individual's goals and circumstances are unique.

What you can do is use the rules as general guidance. Assess your goals and needs regularly, and adjust your strategies for saving, investing, spending and debt payment accordingly.

We’ve summarized 10 common personal finance rules that you can refer to but can feel free to pick and choose based on your own situation:

1. “Save 10% for retirement.”

If you are comfortable enough to start saving, a common rule of thumb is to save 10% of each paycheck for retirement.

Catherine Hawley, a San Francisco-based financial planner, told MagnifyMoney that 10% may too low a bar for many workers, especially those whose incomes may fluctuate.

“[This rule] might be better thought of as a starting place one builds on,” Hawley said. “If you have a high income but anticipate switching careers or if that income is not stable, such as some sales jobs, your long-term savings rate may need to be closer to 50% to keep you on track for retirement.”

By saving more now, you’re allowing yourself a cushion of protection if you were to see a major reduction income.

Another reason the 10% rule isn’t so great is that some people simply can’t afford to go there just yet. In that case, it’s much better to start with 4% or 5% and work your way up than let this rule dissuade you from saving at all.

Instead: If you are earning a lot, don’t let the rule stop you from saving more. If you are early in your career, you don’t have to get up to 10% all at once. At the very least, contribute enough to your company-sponsored retirement plan to capture the full company match, if you are offered one. From there, consider increasing your contribution based on your other financial goals.

2. “Whatever you do, max out your 401(k).”

Financial planners can’t emphasize enough the importance of saving for retirement: The earlier you start saving and the more you contribute, the better. But maxing out your 401(k) isn’t necessarily a good idea for everyone.

The legal maximum amount you can save in your 401(k) is $18,500 in 2018 ($24,500 if you are 50 or over). If you were starting from scratch, you would have to tuck away more than $1,500 a month to max it out by the year’s end.

If you are a high-wage earner, it’s great if you can max it out without much effort. But if you make $50,000 a year, you would have to stash nearly 40% of your salary for retirement. Remember, this is money that, if contributed to a traditional 401(k), can’t be withdrawn until age 59 1/2 without incurring penalties (with some exceptions).

Planning for retirement from an early age is wonderful, but there may be other goals you want to achieve when you are young and need money in the near future. For example, you might want to prioritize paying off high-interest debts like credit cards or auto debt before throwing a good chunk of your paycheck into your retirement fund. And you should definitely save up at least a few months’ worth of income in your savings account so you have money set aside in case of emergencies.

It’s not wise to sacrifice your current life goals if maxing out your 401(k) is a tough task.

Instead: Although there are multiple benefits to saving for retirement, you may want to take a holistic view of your financial situation and review your near-term financial goals before deciding whether or not to max out your 401(k). Read our guidelines on things you should consider before hitting that maximum.

3. “Save at least three to six months’ worth of expenses.”

One common financial planner mantra is that you should have an emergency fund to cover three to six months of expenses.

Clearly, not many people can achieve that goal. The Federal Reserve reported that in 2016, 44% of Americans could not come up with $400 in cash to cover emergencies.

Depending on circumstances, some people probably can make do with a smaller cash reserve, but others may need a bigger one.

Hawley suggested for those who have consumer debt, they may be better off having a smaller emergency fund while prioritizing paying off one’s deficit.

A person who has an unstable income or several mouths to feed may find that three to six months’ worth of expenses may not be nearly enough. For example, if you’re a freelancer or a seasonal worker, you may want to double your savings goal so you can cover any dry spells.

“If you are very conservative or in a volatile industry where you periodically get laid off you may be more comfortable with more cash on hand,” Hawley added.

Instead: An emergency fund is an account you can use to cover necessary expenses in case you lose a job, your car breaks down or you get hit by an unexpected hospital bill. Your non-routine costs like a vacation or a kitchen renovation should not be part of the calculation. Don’t be afraid to go below or beyond the three-to-six-month rule considering your needs and debt situation. In general, the less steady your job is and the more dependents you have, the larger your emergency fund should be.

4. “Subtract your age from 100 to get your perfect investment allocation.”


One of the most basic rules for asset allocation is to subtract your age from 100 to calculate the percentage of your portfolio that you should keep in stocks.

Under this rule, at age 25, for instance, you should keep 75% of your portfolio in stocks and the rest in bonds and other relatively safer securities. At age 75, you invest 25% of your assets in stocks. The idea is to gradually reduce investment risk as you age, because older people don’t have as much time to wait for a market bounce-back following a dip.

Much research has been done about asset allocation adjustment for retirement. Experts have different conclusions based on different models. David Blanchett, head of retirement research for Morningstar Investment Management, concluded in an 2015 article that declining shares in equity as people grow older is best for retirement planning in an environment of low bond yields and decent market performance.

This 100-minus-age rule is a good place to get people started in allocating their investments, but it has its flaws.

Americans are living longer and retiring later. The average life expectancy was 79 in 2015, five years longer than 1980, according to the World Bank. Retirement savings strategies should be adjusted as people need a bigger nest egg, can potentially grow the money more and recover from a market downturn.

At the same time, the yield on a 10-year Treasury Bill is roughly 2.5%, down from a peak of nearly 16% in the 1980s. But the stock market keeps soaring — the Dow Jones Industrial Average shot up 24% last year and hit 26,000 for the first time the third week of January. It may not make as much sense today to dump a large portion of money into fixed income when you could potentially reap greater gains.

Instead: Rebalance your investment portfolio each year, considering your target retirement age, plans on using the funds at retirement, your risk tolerance and market performance. If you’re feeling more comfortable with risk, use 110 (or even 120) as a starting point to calculate your stock exposure.

Maria Bruno, senior investment analyst at the Vanguard Investment Group, told MagnifyMoney that stocks should be a significant part of a young worker’s portfolio — 80-100% in equity is very reasonable. For people in retirement, it’s better to be more conservative but still not too afraid to take some risks. A ratio of 60:40 stocks to bonds is considered a balanced allocation for them, Bruno said.

“Equities still do play a role for somebody at retirement because they could be looking at a 30- to 35-year time horizon,” Bruno said. “Individuals may think that they are playing it safe by staying out of the market, but actually what they are doing is they are overexposing themselves to inflation risk, because the portofolio can’t grow in real terms.”

5. “Withdraw 4% of your savings in retirement.”

Here is another retirement savings regimen: You start withdrawing 4% from your portfolio in your first year of retirement, increasing your withdrawal each year enough to cover inflation.

If you have $1 million in your retirement account, for instance, you take out $40,000 for the first year. If the annual inflation rate is 2%, then you withdraw $40,800 the following year ($40,000 plus 2%). And you continue on the path for the next 30 years. This rule was created based on historical data by financial advisor William Bengen in 1994.

But this is not how life works; it hardly goes as planned. Your spending in retirement may vary year by year. This rigid rule doesn’t take into consideration of your investment performance, your retirement time horizon nor the current market and economic conditions. It assumes retirees have a portfolio split between stocks and bonds. Bengen later revised the rule himself to 4.5%, using a more diversified portfolio.

Instead: Be flexible. Revise your spending rate annually based on needs, portfolio performance and taxes. If you have a personal financial advisor, discuss with your planner to determine the withdrawal rates that best suit your personal situation.

For early retirees or someone who’s invested much more conservatively and may have a smaller nest egg, they would probably need to withdraw a little under 4% to make sure their lifestyle remains sustainable, Bruno said. On the other end, she said someone with a shorter horizon — in other words, someone who doesn’t think they’ll have much time to enjoy their savings —  or who’s late in retirement shouldn’t feel tied to that 4% rule; instead, they could stand to spend a little bit more.

6. “Spend no more than 30% of your income on housing.”

The 30% rule is a common budget benchmark for housing costs. The idea is to cap your rent or mortgage at under 30% of your monthly income.

This idea stems from housing regulations from the late ’60s. A U.S. Census Bureau study said the Brooke Amendment (1969) to the 1968 Housing and Urban Development Act established the rent threshold of 25% of family income in response to rising renting costs. The rent standard later rose to 30% in 1981, which has since remained unchanged, according to the study.

But the standard crafted almost four decades ago may not be realistic for many today. A Harvard University study shows that in 2015, nearly 21 million renters — that’s nearly half of the country’s renters — spent more than 30% of their income on housing across the country.

Instead: Think of affordability instead of the 30% rule. Depending on how much you earn, how much debt you bear and where you live, rent could be more or less than 30% of your paycheck. Hawley said she encourages people to work on earning more when rent eats away a huge chunk of income, which may be easier than relocating to reduce rent. If you live in a relatively affordable area compared with California or New York, housing doesn’t have to fill 30% of the budget, she said. In that case, you may have wiggle room to save more.

7. “Buy in bulk.”


Price per unit may be cheaper at club warehouses like Costco than a local grocery store, and buying in bulk saves money for tens of thousands of American families. But bulk-buying won’t necessarily save money if you buy more than what you can consume. Indeed, many shoppers confessed they have always bought more than they needed just because they couldn’t avoid the temptation of “super deals” at those clubs.

In addition, wholesale markets are not a paradise for every family. If it’s a family of two, the quantities of groceries you stocked up from a major trip to a wholesale market are so large that it may take weeks or even months to consume. You are basically paying upfront a lot more for saving money later. Worse yet, jumbo-sized products may go rotten or expire before you remember that they are even there.

A 2014 University of Arizona study found that families trying to buy all their groceries in one major trip, stocking up on discounted items and purchasing in bulk often buy things that end up unused.

Instead: Buy what you need and how much you need now.

8. “Borrow as much student debt as your expected salary.”

Many college students find themselves saddled with an enormous student loan debt today.

When determining how much students should borrow for higher education, a rule of thumb is that you should cap your total student loan debt below your expected first-year annual salary.

But wait a minute, private schools charge far more than public universities. In some industries, wage growth has been in Stagnantville for decades. Graduates may see big wage increases as their careers advance if they are in finance or law. But if they are government workers, their pay raises may not come as often and substantial.

In a MagnifyMoney survey of the 2017 graduate class, 40% of the 1,000 surveyed recent graduates with student loans anticipated that they’d need more than 10 years to repay their student loans.

Aside from the projected initial annual salary, many other factors, including time expected to repay the loan, the school you attend, the industry you may end up entering, should go into the borrowing calculation.

Instead: Figure out how much you actually need to borrow by evaluating the potential costs, including tuitions, fees and living expenses. Adjust your lifestyle and cut down unnecessary expenses. Remember, you want to borrow as little as possible. Find a loan that works for your future lifestyle. Refinance student loans to a lower interest rate can help you save money.

[9 Options to Refinance Student Loans]

9. “Pay off your mortgage before saving for retirement.”

You may be advised to pay off your mortgage as early as possible because debt is a liability. It may feel great to be completely debt-free, but slowly paying off your mortgage early isn’t always the best move, especially if you are not living in your home for the long run.

“If you can pay off the house you plan to stay in for five years or more after the debt is retired, great,” said Kristin C. Sullivan, a Denver, Co.-based financial planner. “If not, keep that money for yourself and invest more in your 401(k) or other assets that have the possibility for growth.”

Homeowners who purchased their homes after Dec. 15, 2017 can deduct mortgage interest paid on up to $750,000 in mortgage debt from their taxes under the new tax law. For those living in expensive housing markets who will itemize their taxes, that’s all the more reason to invest that money elsewhere.

Instead: Before adding extra monthly mortgage payment, you should pay off other high-interest debt first, such as credit card balance. Prioritize your financial goals, for example, ask yourself whether paying off the mortgage or investing for retirement is more important for you, or if you want to save for your children’s education. If you can enjoy the tax benefits or plan to move in the next five years, that money can be well used in other ways.

10. “Credit cards are bad.”


Many people shy away from credit cards, being fearful that they will spend money they don't have and later be trapped in debt over their heads. Those people are more likely to rely on debit cards or cash.

But credit cards are not that bad at all if they are used wisely. A cardholder will stay out of trouble if he/she can pay off the balance on time and in full to avoid a high-interest charge.

By steering clear of credit cards, consumers not only miss the opportunity to build credit, but lose rewards, which can come in forms of travel points or cash, that credit card companies give to incentivize cardholders to spend.

Instead: Stick to your budget and spend within your means. Focus on your card balance — not your credit limit. Set auto payment to pay off your credit debt in full, not just the minimum balance, every month. Check our latest review of best credit card offers and how to choose a card that suits your needs.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Shen Lu
Shen Lu |

Shen Lu is a writer at MagnifyMoney. You can email Shen Lu at

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