3 Best Money Moves for August 2022
OWith the record-breaking July heat, you might still be dreaming of that white-sand beach getaway (or maybe you were lucky enough to take that beach vacation). But with August here, it’s time to apply the Aloe and get back to reality – or back to school.
For this month’s installment of Money Moves, we’ll walk you through the various tax-free holidays for school supplies. You’ll also want to keep your eyes peeled this month for updates on federal student loans, as payments are expected to restart soon. We’ll also share tips on how to support Black-owned businesses in your community for National Black Business Month.
Here are three big money moves you should make in August.
1. Take advantage of tax-free holidays to do your back-to-school shopping
More than a dozen states hold annual tax-free vacations to help parents and students prepare for the upcoming school year or semester.
This means for you, if you live in one of these states, that sales tax will not apply to certain school-related items at retailers. This translates to a discount of around 4% to 7% depending on where you live. It might not seem like a lot at first, but it can add up.
According to the National Retail Federation, families of K-12 students expect to spend an average of $864 on back-to-school shopping this year. For students, that number is $1,199.
And with an inflation rate of 9.1%, every little bit saved counts.
The Federation of Tax Administrators (FTA) says the following 15 states have back-to-school tax holidays in August:
- Illinois (reduced sales tax rate)
- New Mexico
- Caroline from the south
- West Virginia
While the August 5 weekend is the most popular tax holiday, each state sets its own rules that include spending dates and limits, as well as items eligible for tax relief. Before going to the store, check with the FTA for details of your condition.
Note: Mississippi and Tennessee also have tax holidays, but they ended mid-to-late July. Additionally, five states – Alaska, Delaware, Montana, New Hampshire and Oregon – have no sales tax.
2. Watch for federal student loan updates like a hawk
The federal student loan forbearance period is approaching its August 31 expiration date. If you’re one of the nearly 40 million borrowers who have federal loans eligible for the ongoing payment pause, you might already know this.
The deadline for resuming payments has already been extended six times. Many wonder if President Joe Biden will push back the date yet again. Some experts think another extension is likely.
“The lack of communication with the borrower to date makes an extension of the payment pause very likely,” Robert Farrington, founder and CEO of The College Investor, told Money recently.
Still, that’s no excuse to disconnect. You’ll want to keep an eye out for your loan officer’s notices – an indication that lending is about to resume. Or, you’ll want to stay on top of the news to see if another expansion is officially announced.
Experts also expect Biden to unveil student loan forgiveness plans alongside a decision on forbearance. Many assumed this announcement would come in April, but Biden kept a fairly low profile. The president said he would make a decision by the end of August, and he signaled his support for canceling $10,000 of federal student debt per borrower — possibly with an income cap. between $125,000 and $150,000.
For now, nothing is certain. If you have federal student loan debt, the safest course of action is to assume that the payment pause will end in August and payments will resume soon after.
3. Discover and Shop at Black-Owned Businesses
Every month is a good month to shop at black-owned businesses. But as National Black Affairs Month, August is a particularly good month to do so.
Due to structural inequalities in the United States, including a lack of generational wealth to exploit and unequal access to capital, black-owned businesses are somewhat difficult to find.
According to the latest Census Bureau data, there were only about 135,000 black-owned businesses with more than one employee in 2019.
Given that the pandemic has hit black businesses disproportionately, it’s likely those numbers have dropped. A report by the US House Committee on Small Business, for example, found that during the early days of the pandemic, black business ownership rates fell by 41%.
This month, take the time to research Black-owned businesses in your community and look for ways to incorporate them into your regular shopping routine, even after August ends.
Here are some websites for finding black-owned businesses.
- black woman possessed: a marketing service that connects you with black women-owned businesses through a directory and mailing list.
- ByBlack: a partnership between the US Black Chambers and American Express. It acts as both a directory and a certification body for black-owned businesses.
- support black people: an online directory where you can search by business type and postal code.
- Official Black Wall Street: an SEO service for black-owned businesses, e-commerce sites and restaurants. Use the site to “find anything black owned. Whenever.”
You can also search for black chambers of commerce chapters in your area. They work to list and promote nearby Black-owned businesses. Another strategy: Some nationwide e-commerce sites and apps allow you to filter your searches by black ownership.
Target, for example, launched a “Black Beyond Measure” campaign that lets you search for products from black businesses and suppliers on its website. Similarly, UberEats lets you target your restaurant options by typing “black-owned” in the search bar.
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