Thrifty Thursday: Is Layaway a Frugal Option?
Susan Adcox | About.com:Grandparents | Thursday, September 3st, 2009
Thrifty Thursday: Is Layaway a Frugal Option?
Years ago, my girlfriends would tell me about their shopping trips and their great finds. "Did you buy it?" I would ask. We were all on budgets in those days. "No, but I put it on layaway!" might be the answer, often spoken in a conspiratorial whisper.
If you're a grandparent, you probably remember layaway from the days before credit cards were popular. Layaway is making a comeback of sorts and is now being offered by Sears, K-Mart and a number of other stores. It works like this. Find an item that you like and take it to the layaway counter. Make a down payment which includes a service fee and then make payments every other week until the item is paid off. The down payment and biweekly payments must be made in cash, although the final payment can be put on a credit card.
Should grandparents return to their roots and adopt the layaway plan? At K-Mart and Sears, the service charge is $5, which isn't much, but the process of going to the store every two weeks and paying cash may be onerous. A website called eLayaway offers a similar plan, with a 1.9% service charge, but payments are drafted automatically from the purchaser's bank account.
Layaway could be a frugal option for families who are not using credit cards for some reason, enabling them to take advantage of great bargains even if they don't have the full purchase price on hand. For most of us, though, I don't see a return to the magic of that whispered, "I put it on layaway!"
Comments
September 3, 2009 at 7:01 am(1) Katherine says:
I agree with you that layaway doesn’t save money for the majority of people. BUT if you are someone who has racked up a lot of credit card debt in the past, it may be better to cut up the cards and use layaway instead. The layaway fees end up being less than credit card interest — maybe you can think of it as buying willpower since you don’t have enough of your own to resist overspending.
September 3, 2009 at 8:08 am(2) Susan Adcox says:
That’s a great point, Katherine, and there are lots of people in that situation today. In fact, quite a few people are having to live without credit cards due to having defaulted on their debts. Layaway could be a lifesaver for them.
September 3, 2009 at 4:17 pm(3) Laurie Kirby says:
No, I don’t see that magic time returning either. Now we can’t afford the gas to take us to the store every two weeks (and maybe not even a car).
September 3, 2009 at 4:36 pm(4) Molly says:
I guess layaway was made for somebody like me.
I’ve put two items on layaway in the past two years… a winter jacket that was on sale in the Spring and a crib for my new baby that I started paying on a few months before he was born and paid off a month before. The jacket was at an independant shop, they know me, know I will pay and didn’t charge any fee. The crib had a very nominal fee.
I don’t often use a credit card. When I was in college I ran my credit card too high and struggled for almost two years to pay it off. Now I pay the balance off in full at the end of each month but am really cautious about using it at all.
The real benefit with layaway isn’t necessarily the amount of money you save by not paying by credit card. The best thing about layaway is the MINDSET it puts you in, you can’t have your item that you want until you have the money to pay for it. And it gives you the opportunity to still get something you really want before it’s gone even if you don’t have the money at that moment. Also, knowing you are committing to going in to make payments really does force you to think “do I really need this?” in a way that a credit card purchase, with it’s instant gratification, does not.
September 4, 2009 at 12:34 am(5) Buddy says:
Miss Kirby: If this is your given name.Please DON’T post it online in ANY forum.ID Theft is rampant at a Pandemic rate these days.No offense intended ,just a Man that really CARES about OTHERS and their well being.
Take care and have a very fullfilled—prosperous–and happy life filled with much love–joy–and cheer.The SAME for all FOUR of you very wise Ladies.Greetings from Virginia.It’s good and refreshing to see INTELLIGENCE demonstrated on a net message board for once in a blue moon.
September 4, 2009 at 8:41 am(6) Susan Adcox says:
Thanks to all who took the time to read and comment. As Buddy says, this was a refreshing and intelligent exchange of opinions and information. Molly, you make an excellent point about changing your mindset about money. That’s the greatest difference I see between those who manage well financially and those who struggle. Those who manage well really question the wisdom of every purchase, whereas those who struggle find a way to justify each item that they want.
September 6, 2009 at 10:42 pm(7) Barbara says:
It is not true that you have to return to the store every 2 weeks and make your payments in cash. I put a sewing machine in layaway at K-Mart two years ago. Since the store is 25 miles away, I mailed a check every 2 weeks and used my debit card for the final payment when I picked up my purchase. Just thought I would let you know…
September 7, 2009 at 8:29 am(8) Susan Adcox says:
I’m glad to know that K-Mart offered you some flexibility. The information on their website doesn’t say anything about a mail-in option, but it certainly makes more sense. Thank you for your comment!
September 8, 2009 at 4:43 pm(9) Barbara says:
Susan, if you check the K-Mart site again, there is a box that says ‘Learn More’ and ‘Download PDF’. That will take you to 2 pages with more info. On page 2 it states…Mail payments can only be made with a check. So they do offer this option.
September 8, 2009 at 4:59 pm(10) Susan Adcox says:
Thank you for this extra information. I did not download the PDF file. My readers are a wonderful resource!
