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Here’s How the House and Senate Tax Reform Plans Would Affect Homeowners

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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House and Senate Republicans have rolled out separate versions of tax-reform plans, aiming to cut taxes for corporations and individuals. Although the two bills diverge in a number of ways and the fate of both remains in flux, one thing’s for certain: Homeowners would be affected under both plans.

In this article, we lay out the changes to housing-related provisions under both plans and explain what they would mean for existing homeowners and first-time homebuyers.

Where are we?

The House version of the tax bill passed by a 227-205 chamber vote ahead of Thanksgiving. The Senate Committee on Finance approved the Senate’s version of the Tax Cuts and Jobs Act late on Nov. 16 with a 14-12 vote along party lines.

The Senate’s bill is to go to the full Senate for a vote the week following the Thanksgiving holiday. President Trump has called on lawmakers to pass one cohesive bill by Christmas, and Republican legislators would like to see the reforms take effect in 2018.

What are the changes?

Here’s a quick overview of housing-related changes proposed in the bills:

  • Both bills nearly double the standard deduction, while eliminating personal exemptions.
  • The House and Senate both proposed changing residency requirements for capital gains home-sale exclusions by increasing the live-in time period to five out of the last eight years. Current law allows people to write off up to $250,000 — or $500,000 for couples filing jointly — from capital gains when selling a home, as long as they have lived in it for two out of the past five years.
  • Under the House plan, mortgage borrowers can deduct mortgage interest on loans up to $500,000, for debt incurred after Nov. 2, 2017. Currently, the tax deduction cap is $1 million. The deduction for state and local income taxes would be gone. The state and local property tax deduction would remain but be capped at $10,000. (There is no cap, currently.)
  • The Senate bill would leave the mortgage interest deduction unchanged, but eliminate all state and local tax deductions (SALT), including deductions for property taxes.

Read more about the Senate and House bills here.

Fewer people will claim mortgage interest deductions

The National Association of Realtors (NAR), a vocal critic of the tax reform proposals, expressed through statements and press briefings that both plans would negatively affect homeownership. The association has called the tax reform legislation an “overall assault on housing.”

“Simply preserving the mortgage interest deduction in name only isn’t enough to protect homeownership,” NAR President Elizabeth Mendenhall said in a statement.

Nearly doubling the standard deductions and repealing some itemized deductions would likely mean that far fewer people would itemize when they file taxes. NAR officials worry that these moves will undercut the incentives to pursue homeownership.

The standard deduction is a fixed dollar amount, based on your filing status and age, by which the IRS lets you reduce your taxable income. The itemized deduction allows you to list your various deductions, including the mortgage interest deduction. You can claim one or the other — whichever lowers your taxable income more.

The standard deduction for a married couple filing jointly is $24,400 under the House plan and $24,000 under the Senate plan. Wolters Kluwer, a global information services company, suggested in an analysis that only those taxpayers who would deduct more taxes through itemizing than taking the bigger standard deduction — the top earners — would benefit from itemizing deductions like the one for mortgage interest.

Impact under House plan

Capping the mortgage interest deduction

The good news is that the majority of existing homeowners won’t be affected by the cap on the mortgage interest deduction, because only about 21 percent of American households take the deduction under the current law, according to the Tax Policy Center.

But about 18.5 percent of new homebuyers would get hit with a bigger tax bill on their housing-related tax liabilities, according to an analysis released by Trulia, an online real estate resource for homebuyers and renters.

Many economists say the mortgage interest deduction distorts the housing market by driving up home prices and soaking up much-needed supply, and that it doesn’t necessarily help increase homeownership rate.“Because the mortgage interest deduction skews to upper-income families, it encourages people to buy bigger homes,” Nela Richardson, chief economist at Redfin, a Seattle-based real estate and technology company, told MagnifyMoney. “It also encourages builders to also build bigger homes, so it encourages sprawl.”

Less than 10 percent of the bottom 90 percent of the income distribution receive the tax subsidy on mortgages, the Tax Policy Center said.

Richardson added that this doesn’t mean the deduction should be completely eliminated. She said she thinks putting a cap on the deduction is only to make the math work for the corporate tax cut, though it is not structured in a way to help middle-class homeowners.

“People who have the means to buy those homes” with a mortgage of more than $500,000 “would continue to buy those homes,” Richardson said. “What we’d like to see is [changes] to help buyers who wouldn’t be able to afford a house unless they got some kind of tax credit. That would be a subsidy that was progressive instead of regressive.”

A silver lining to some: Middle-class homeowners might benefit from an income tax cut, which hopefully would help them purchase a house, experts say.

“The result of that is still a little fuzzy,” Richardson said. “It’s not clear that middle-class buyers in the long run would actually receive an income tax cut.”

What does it mean to first-time homebuyers in expensive cities?

The mortgage interest deduction provides little benefit to new home buyers because many new U.S. homeowners do not itemize or are in the 15 percent tax bracket or lower, William G. Gale, chairman of federal economic policy in the Economic Studies Program at the Brookings Institution, wrote in an analysis for the Tax Policy Center.First-time buyers are generally looking for cheaper homes. Nationally, the median sales price for existing homes is $245,100, according to the Federal Reserve Bank of St. Louis, well under the $500,000 cap, so capping the mortgage interest deduction shouldn’t affect them too much.

But for buyers in high-cost markets, where demand is high and affordability is challenging, the cap will sting, Richardson said.

“You cannot find a $500,000 home in the Bay Area,” Richardson said. “Good luck with that.”

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In San Francisco, the median home sales price is around $1.2 million, according to Redfin and Trulia.

Home prices are expected to go up next year, as the Federal Reserve is expected to increase the short-term interest rate by year’s end, economists say.

“For the first-time buyer, you are dealing with this double whammy,” Richardson said. “If you add onto the fact that really expensive states’ first-time home buyers won’t be able to deduct all of the mortgage interest, then that is an additional expense. So it really is a challenging situation to put new buyers in.”

Trulia reported that across the 100 largest markets, more than half of homebuyers in coastal California, New York and Cambridge, Mass., would experience an increase in their home-related tax liabilities if they purchased a home under the House plan.

Impact on housing supply

Real estate experts expect less movement in the housing market since people who already own homes with big mortgages can continue to deduct the interest. This would make the housing supply crunch even worse in those expensive markets because people may choose to stay in the same house, knowing they couldn’t deduct the same amount of interest on their next big mortgage.

Factor in a longer live-in requirement for capital gains exclusions of homes sales, which economists believe will result in more homeowners waiting longer before moving to a different house to save on capital gains, and it would be even trickier for first-home buyers to bid for a desirable house in higher-end markets.

“It’s definitely not going to help alleviate price increases,” Cheryl Young, senior economist at Trulia, told MagnifyMoney. “But it will also contribute to competition.”

Trulia found that roughly 10 percent or more of existing homeowners in California and the Northeast would lose the incentive to sell their homes. Nationwide, the figure is 2.5 percent.

What does it mean for homeowners in high-tax states?

People living in high-tax states, such as New Jersey, New York and California, where homes are also costly, will see a rise in their property tax liability on taxes paid above the $10,000 property-deduction cap.

Trulia estimates that more than 20 percent of existing homeowners in New York and San Francisco would experience an increase in their property tax bills. Nationally, about 9.2 percent of existing homeowners will experience an increase in their property taxes.

Impact under Senate plan

Bigger property tax liability

Although the Senate plan is in some respects seen as more straightforward than the House bill, removing all SALT deductions would have a more expansive impact on homeowners across the country. That’s because they wouldn’t be able to deduct their property taxes anymore, Trulia’s chief economist, Ralph McLaughlin, explained in an analysis.

Existing homeowners in the Northeast and the Bay Area — New Jersey, New York, Connecticut and California — would be hit the hardest, according to McLaughlin.

A study commissioned by the National Association of Realtors and conducted by PricewaterhouseCoopers (PwC) found that, for many homeowners who currently benefit from the mortgage interest deduction, the elimination of other itemized deductions and personal exemptions would cause their taxes to rise, even if they elected to take the increased standard deduction.

The study found that homeowners with adjusted gross incomes between $50,000 and $200,000 would see their taxes rise by an average of $815.

Mortgage interest deduction would be worth less

Leonard Burman, a fellow at the Urban Institute and professor of public administration and international affairs at Syracuse University, wrote in an analysis that if homeowners cannot deduct state and local income, sales and property taxes, only the very wealthy and the very generous would benefit from itemizing. As a result, he estimated that only 4.5 percent of households would itemize under the plan, compared with the current 26.6 percent.

“Even for those who continue to itemize, the mortgage interest deduction may be worth much less than many homeowners believe,” Burman wrote. “This is because net tax savings depend not only on whether mortgage interest plus other deductions exceed the standard deduction, but by how much.”

Advertiser Disclosure: The products that appear on this site may be 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 financial institutions or all products offered available in the marketplace.

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Shen Lu is a writer at MagnifyMoney. You can email Shen Lu at [email protected]

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How Fed Rate Hikes Change Borrowing and Savings Rates

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Since late 2015, the Federal Reserve has raised the upper limit of its target federal funds rate by 2.25 percentage points, from 0.25% in December 2015, to 2.50% in 2019.

The Fed is no longer expected to raise rates. Now, the question is whether the Fed will cut the federal funds rate sometime this summer. The market is increasingly confident that at least one rate cut will occur this calendar year.

MagnifyMoney analyzed Federal Reserve rate data to illustrate how the rates consumers pay for loans and earn on deposits have changed since the Fed started raising them two and a half years ago.

  • Credit card borrowers are currently paying $113 billion in interest annually, up $34 billion from the annual $79 billion they paid prior to the first Federal Reserve interest rate hike in December 2015, making introductory 0% APR deals all the more attractive.
  • Meanwhile, depositors earned significantly more from savings accounts. In the 12 months ending in June 2018, depositors earned $26.8 billion in interest on their savings accounts, up $16.8 billion from the $10 billion they earned in 2015.
  • According to our analysis, credit card rates are most sensitive to changes in the federal funds rate, almost directly matching the rate change with a 3 percentage point increase since December 2015. Credit card rates will continue to rise in line with the Fed’s rate increases, and if the Fed raises them again, the average household that carries credit card debt month to month will pay over $150 in extra interest per year compared with before the Fed rate hikes began. MagnifyMoney estimates 122 million Americans carry credit card debt month to month.
  • Student loan and auto loan rates have also risen  — but by less than half as much as credit card rates — in part because they are long-term forms of lending that are less reliant on the short-term federal funds rate. Federal student loan rates are set based on the 10-year Treasury note rate each May.
  • Savers at big banks have seen little change, with the average savings and CD account passing through only a fraction of the rate increase. However, that masks a big opportunity for savers who shop around and move deposits to online banks. Online banks have aggressively raised rates, and now often offer rates of more than 2%, versus just 1% in 2015. That’s over 20 times what typical accounts pay.

In addition, MagnifyMoney also looked at the impact on consumer rates the last time the Fed reduced rates in 2007.

 

Generally, unsecured loans like credit cards and personal loans are more rate-change sensitive than secured loans like autos and home mortgage rates, no matter the direction of the rate change. However, savings products like Certificates of Deposit are a stark exception. Even after 3 years of fed funds rate increases, CD rates generally languished at rock-bottom rates until very recently, and then only increased modestly, relative to other financial products. Compare that to 2007, when it was the product most sensitive to interest rate cuts.

 

Let’s take a closer look at how the Fed rate hike impacts different financial products:

Credit cards

Most credit cards have a rate that’s directly based on the prime rate, for example, the prime rate plus 9.99%. As a result, card rates tend to move almost immediately in line with Fed rate changes. In the current cycle, the rates on all credit card accounts tracked by the Federal Reserve have increased 3 points, even more than the Fed’s increase of 2.25 points.

That said, consumers can still find attractive introductory rate offers.

For example, 0% balance transfer offers have continued to have long terms even as the Fed hiked rates, with offers still available for nearly two years at 0%.

Credit card issuers make up for the rate hike with the automatic rise in variable back-end rates, as well as the increasing spread between the prime rate and what consumers pay on new accounts. They can also increase other fees, like late payment fees or balance transfer fees to keep long 0% deals viable.

The Federal Reserve tends to hike up interest rates gradually over time. And people in credit card debt will barely notice the rate increase in their monthly statement. When rates are increased by 0.25%, the monthly minimum due on a credit card will increase $2 for every $10,000 of debt.
The danger of such a small increase in the monthly payment is complacency. Remember that by paying the minimum due, you could be in debt for more than 20 years.

Rates are expected to keep rising, so it makes sense for consumers to lock in a low rate today. The best ways to lock in lower rates are by leveraging long 0% balance transfer deals or by consolidating into fixed rate personal loans.

Savings accounts

On average, savings account rates haven’t changed much since the Fed started raising rates. That’s largely because big banks with the biggest deposits and large branch networks have less incentive to offer higher rates, and this skews national data on rates earned because most savers don’t shop around to find higher rates at online banks and credit unions.

Consumers who shop around can find much higher savings account rates than three years ago, and shopping around for a better rate on your deposits is one of the best ways to make the Fed’s rate hikes work in your favor.

Back in 2015, it was rare to see savings accounts pay 1% interest.

Today, many online banks are competing for deposits by offering savings account rates in excess of 2%, flowing through about half of the Fed’s rate hike into increased rates for depositors. These rates will continue to rise as the Fed hikes rates. The increases are already apparent in the data. Depositors are currently earning more than $26 billion in interest on their savings accounts annually, versus $10 billion in 2015.

CDs

CD rates have moved faster than savings rates, up 0.41 points for 12-month CDs since the Fed started raising rates. That’s in part because they are a more competitive product that forces consumers to rate shop when they expire at the end of their 6-month, 12-month or longer term.

But that rate rise doesn’t fully reflect what some smaller banks are passing through, as the banks with the largest deposits have been slow to raise rates.

The rates on 1- and 2-year CDs at online banks have been increasing rapidly, and are now well over 2%, reflecting much of the Fed’s rate increases since 2015.

The rates on 5-year CDs have also finally begun to increase, with some banks offering 60-month CDs with rates above 3.50%. As a result, the rate curve has been steepening.

Still, a reasonable strategy would be to invest in short-term (1- and 2-year) CDs. If competition on the short end continues, you can get the benefit in a year on renewal.

Student loans

Federal student loan rates are set based on a May auction of 10-year Treasury notes, plus a defined add-on to the rate. Today, rates for new undergraduate Stafford loans stand at 5.05%, up from 4.30% before the federal funds target rate began to rise.

Since student loan rates are determined by the 10-year Treasury rate, rather than a short-term rate, they are less directly related to changes in the federal funds rate than some shorter-term forms of borrowing like credit cards. Instead, future market views of inflation and economic growth play a role. Federal student loan rates are capped at 8.25% for undergraduates and 9.5% for graduate students.

For private refinancing options, rates depend on secondary markets that tend to follow longer-term rates, rather than the current federal funds rate, but in general, a rising rate environment could mean less attractive refinancing options.

Personal loans

Personal loan rates tend to be driven by many factors, including an individual lender’s view of the lifetime value of a customer, funding availability and credit appetite. Most personal loans offer fixed rates, and in a rising rate environment overall, we expect these rates will go up, making new loans more expensive, so consumers on the fence should consider shopping for a good rate sooner rather than later. Since the end of 2015, rates on 2-year personal loans tracked by the Federal Reserve have increased by 0.61 basis points.

Auto loans

Prime consumers who shop around for an auto loan can still find very low rates, especially when manufacturers are offering special financing deals to move certain car models.

But the overall rates across the credit spectrum have gone up since the Fed raised rates, in part due to the rate hikes and because of recent greater than expected delinquencies in some parts of the auto lending market.

Mortgages

Since the Fed started raising rates in late 2015, the average 30-year fixed mortgage rate has increased from approximately 3.90% to 4.55% as of Dec. 27, 2018. The mortgage market tends to follow trends in longer term bond markets, like the 10-year Treasury, since mortgages are a longer-term form of borrowing. That shields them from the impact of Fed rate hikes, and it’s not unusual for mortgage rates to decline during some periods when the Fed is raising rates.

What can consumers do

Eve if rates are no longer going up, life is still expensive for debtors, and more rewarding for savers than in recent years.

If you are in debt, now is the time to lock in the lowest rate possible. There are still plenty of options at this point in the credit cycle for people to lock in lower interest rates.

If you are a saver, ignore your traditional bank and look online. Take advantage of online savings accounts and CDs to earn 20 times the rate of typical big bank rates.

Advertiser Disclosure: The products that appear on this site may be 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 financial institutions or all products offered available in the marketplace.

Nick Clements
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Nick Clements is a writer at MagnifyMoney. You can email Nick at [email protected]

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How to Pay for Transition-Related Expenses Without Going Broke

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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Once a trans person has accepted their gender identity and decided to begin transitioning, it’s an exciting and liberating time. Everyone’s transition looks different, and each person may choose varying interventions. But as soon as someone starts looking at the costs, which could include doctor appointments, bloodwork, hormones, legal name and gender marker changes, a whole new wardrobe and potentially, surgeries, the costs can skyrocket quickly.

This is an especially tough pill to swallow for the trans community, which already faces significant financial disadvantages compared to the general population, according to the National Center for Transgender Equality. As revealed in their 2015 report, this is because many trans people face unsupportive families and suffer from discrimination with employment and housing, which results in financial distress and homelessness at higher rates than cisgender people.

“In the trans community, we see the highest amount of unemployment and housing insecurity,” said Emmett Schelling, executive director of Transgender Education Network of Texas. “Most trans people can’t save money because they’re worried about their day-to-day survival.” This makes it difficult to find money for binders, electrolysis or other transition-related needs when just getting by can be a struggle.

While there are some transition-related expenses that are difficult to avoid, many can be reduced or wiped out with the help of certain resources and strategies. Here’s how to save on several of the most common expenses.

How much does it cost to medically transition?

Not every trans person desires hormone therapy or surgeries. But for those who do, the costs can be high and vary greatly depending on the provider and whether you have health insurance that covers it.

For some ballpark figures, below are the costs of some of the most common transition-related surgeries at The Philadelphia Center for Transgender Surgery, including hospital and anesthesia costs. Note that this clinic and others provide a discount when multiple surgeries are done at once.

For trans women seeking hair removal, electrolysis and laser hair removal are used because they’re the most permanent methods. However, costs may vary drastically, since the number of sessions required to achieve results is unique to each individual and the amount providers charge can differ significantly.

Male-to-female confirmation surgeries and procedures

Breast augmentation

$9,000

Vaginoplasty

$25,600

Rhinoplasty

$9,000

Thyroid cartilage reduction (trachea shave)

$5,400

Female-to-male confirmation surgeries and procedures

Basic chest masculinization

$7,800

Phalloplasty

$24,900

How to finance your transition

Apply for grants

If you want a surgery or procedure that’s still beyond what you can afford, consider applying for a grant. There are several specifically for people who need assistance while transitioning.

“There are a few different nonprofit organizations out there that provide financial assistance for people seeking gender affirming surgery or electrolysis or binders,” said Ryan Sallans, a transgender author, public speaker and diversity trainer. He is also a volunteer vice president of The Jim Collins Foundation, which has an annual grant cycle that awards financial grants for gender-affirming surgery to a limited number of applicants. They offer one type of grant that pays for 100% of surgical fees.

“It makes us a unique organization,” Sallans added. “Being able to tell people that 100% of surgical fees are covered is completely life changing, because a lot of people aren’t able to even put down $1,000 or $2,000 for a surgery.”

Through a legacy donation by a trans woman, they also have a grant available that provides 50% of funding and requires the individual to put down the other 50%. “I actually really love that grant — sadly it’ll be gone in two years — because there are many people who may have most of the money,” he said. “They just don’t have that last piece.”

According to Sallans said each year, they typically receive 400 to 500 applications, and in the past, they were only able to award one to three grants annually. For the last two years in a row, they’ve been able to provide three grants that covered surgeries at 100% and two that covered 50%. The amount they can give out each year depends on how much they’re able to fundraise.

The nonprofit Point of Pride also started offering surgical grants for the trans community a few years ago, and they’ve given out more than $103,000 total in grants. They also have a program to help with the costs of electrolysis for permanent hair removal.

Get creative with fundraising

If you’re struggling to piece together enough money for transition-related expenses, you may turn to credit cards or a loan. But rather than getting into debt, consider fundraising first. Many trans people turn to GoFundMe, Schelling said, which allows them to raise money from their friends and family.

Some people also organize fundraisers; for example, working with local LGBTQ bars to have a percent of one night’s proceeds go toward their surgery. Schelling said he’s seen people in Texas do “plate sales,” where they hold an event and make food, like homemade enchiladas, and sell plates of it to raise money for their surgery. If you get creative with fundraising, he said, and combine it with any savings you do have, you can meet your goals a lot faster.

Explore your insurance

If you have health insurance, read your policy carefully to determine what types of transition-related care is and isn’t covered. If you’re not able to figure it out, call your insurer or ask your job’s human resources team to help you understand your coverage.

Be aware that under the Affordable Care Act, health insurers and medical providers are not allowed to discriminate against you because you’re trans. While this doesn’t mean they have to cover every procedure, an insurer cannot categorically exclude transition-related care, and providers aren’t allowed to deny you care simply because you’re trans — though unfortunately it sometimes still happens.

If you have faced discrimination from an insurer or medical professional, you can file a complaint with the U.S. Department of Health and Human Services. If you need assistance, contact The Transgender Law Center Legal Helpline or call (415) 865-0176 x306.

If you’re on Medicare, know that transition-related care that’s deemed “medically necessary” is supposed to be covered. However, attempts to get surgeries covered by Medicare are not always successful, so ask your doctor about their history with the program and whether or not previous claims have been accepted.

Consider borrowing to help cover the costs

If you’re not able to pay for transition-related costs with savings, you might be able to finance them with one of these options.

Credit cards. Credit cards offer an easy way to borrow funds. Your credit limit might not be enough to pay for an entire major surgery, but it could cover smaller procedures or miscellaneous costs. If your credit card’s interest rate is high, many credit cards offer 0% interest rates for a year or longer, giving you time to make a dent in your debt. If you go that route, just make sure that if you carry a balance, you can handle the payments once the regular APR kicks in. Also keep a lookout for annual fees, and be aware that carrying a high balance can hurt your credit score since it increases your credit utilization ratio.

Personal loans. Another option to pay for transition-related costs or surgery is taking out a personal loan, which gives a lump sum that’s then repaid with interest in fixed payments. You can take out a personal loan from a traditional financial institution, like a bank or a credit union, or from an online lender. Personal loans are typically available anywhere from $1,000 to $50,000, and interest rates vary significantly depending on credit history.

Medical financing. There are also certain financing options specifically for medical expenses. One is CareCredit, a medical credit card accepted by some healthcare providers. CareCredit often offers 0% interest for certain time periods, but if you don’t pay off your balance by the end of that predetermined “promotional period,” you will owe interest retroactively, and at a very high rate. CareCredit should only be used if you know you can pay off your balance in full before interest kicks in. Another option is Prosper — the company known for peer-to-peer lending also offers a special type of healthcare loan in partnership with some doctors. If your doctor uses their system and you’re approved, you can get a loan for up to $35,000 with no retroactive interest.

Find extra work

Another way to help pay for transition-related expenses is to supplement your income. Consider turning to the gig economy, where you can give rides, deliver groceries, charge scooters and a number of other flexible jobs.

Schelling said he’s even encountered many trans people who work at Starbucks for several years. This offers a unique opportunity, he said, since it not only brings supplemental income, but Starbucks also offers extremely trans-inclusive health insurance, even to part-time employees.

3 ways to save on transition-related expenses

Find free clothing

Some trans people slowly start building their new wardrobe over time, but others don’t start purchasing attire that matches their gender identity until they begin socially transitioning. This can get expensive quickly — not to mention, many transitioning people are uncomfortable shopping in public, Schelling said.

One way to get around this is to participate in or start a clothing swap with other members of the trans community. Some organizations put these together, but if there’s nothing in your area, try to organize one yourself. Have everyone bring some clothes they no longer wear, and swap them with those who are now looking for those types of clothes. People can also bring shoes, jewelry, bags, makeup and other items they no longer need.

“In the city next to me, there was a group of trans people who were doing that,” Sallans noted. “They were collecting binders and clothes and giving it out to people when they had a social group meeting or peer support meeting.” Beyond the immediate need, he added that it also helps build a sense of community.

If a clothing swap isn’t an option for you, consider visiting local thrift stores or online marketplaces like Thredup or Poshmark to find gently used clothes at a huge discount.

Schelling added that some organizations and businesses offer free chest binders for trans people who can’t afford one. For example, Point of Pride offers a free binder program.

Look for LGBTQ-friendly healthcare

Many trans people seek out hormone replacement therapy, but if you don’t have health insurance, accessing HRT and any other basic healthcare needs can be extremely expensive. Fortunately, more and more LGBT-focused clinics are currently opening up around the nation, according to Sallans.

“There are different non-profit organizations that can subsidize costs, whether you need access to hormone therapy or general prevention care, like reproductive and sexuality care,” he said. Planned Parenthood is one such organization, he also noted; while not every location offers hormone replacement therapy, many do.

There are also individual clinics, like Kind Clinic in Austin, Texas, that focus specifically on healthcare for the LGBTQ+ community and offer discounted services.

Schelling’s organization has also observed the increase in clinics that offer trans healthcare.

“A lot of times, the upside is there’s access to competent medical care, and some of those clinics assist you with the costs of your medications,” he said. “The downside is that usually there’s a limited amount of days or evenings these clinics are open, so once people find out, the wait list can be two to three months out.” However, he noted that if you’re looking for hormone therapy, once you have your initial blood work completed, you typically only have to go in every few months.

Access free or discounted legal assistance

If you want to legally change your name and/or gender marker, you’ll have to go through your legal system to get new IDs. “Having people who are knowledgeable in this process is extremely important since it can be extremely overwhelming and expensive,” Sallans said. While using a lawyer for this is optimal, especially since laws vary by state, it can be expensive. Sallans said he did his all himself, which was much cheaper, but it was also very daunting.

Across the country, there are law clinics that offer free legal services for name and gender marker changes. For example, in San Antonio, Texas, the local LGBTQ center, The Pride Center, provides free legal gender and name changes through a legal clinic with a local law school. If there’s a law school near where you live, find out if there are any law clinics or programs available to help.

Some individual lawyers also offer free or discounted services for transr members of their community who have these legal needs. If you’re not sure where to start, and your city has an LGBTQ chamber of commerce, see if any lawyers are members. If there are any LGBTQ publications in your city, see if any lawyers advertise in them. Sallans says some nonprofits also offer these legal services for free in various areas.

Transitioning can be an expensive endeavor, but there is an ever-increasing number of resources and organizations available to help make the process more within reach.

Advertiser Disclosure: The products that appear on this site may be 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 financial institutions or all products offered available in the marketplace.

Emily Starbuck Gerson
Emily Starbuck Gerson |

Emily Starbuck Gerson is a writer at MagnifyMoney. You can email Emily here

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