Stacey Makes Cents is back today to talk with us about layaway. (Hey–I’m a poet :).
By now you should know that Barry and I are NOT fans of credit cards. If we don’t have the money for something, we don’t buy it. For some people, this is a problem at Christmas time. I try to combat that problem by buying Christmas gifts all year long – when I can find them on sale, at yard sales, and used. However, I know that most people are not planning freaks like I am. Shocking, huh? If I can’t plan for something, it makes me want to go nuts. I would like to give you a challenge this Christmas. Here it is…..ready? Don’t put any of your gifts on a credit card. I know, I know. Some of you know you have the money to pay for it and just put it on the credit card for points. But, here’s a thought – if you have the money to pay for it, why don’t you? Why use a credit card if you have the money in the bank? Points for pondering. Some of you have good intentions on paying off that card, but you get carried away with the holiday festivities and find yourself in a bind once the bill comes due in January. Then you have to pay interest, making the decision to put the gifts on your card a very bad one. Oops.
For those of you who didn’t plan and don’t have the money to buy all your gifts at once, there is a program out there that can help, without the interest rate of a credit card – layaway. Layaway is a good alternative for those of you who don’t want to use credit cards this Christmas. Several retailers are now offering layaway again and it’s become very popular around the holidays.
How does layaway work? Each store will have their own policy, but basically you pay a small fee (most stores charge around $5-10) and the retailer holds the item for you while you pay it off in installments…..interest free. I’m a fan of this because I don’t like the high fees that credit card companies charge. The only fee for this program is your up-front charge for participating. Even though I am a fan, there are several disadvantages that you also need to keep in mind. Below I’ve listed several pros and cons about layaway so you can make the decision yourself.
-You are able to pay for Christmas gifts, interest free, even if you don’t have all the money immediately.
-You avoid credit card interest fees. The fee is usually lower than interest rates, unless you’re only buying one or two small ticket items. The fee should be less than 10% of the item.
–The store holds your gifts so you don’t have to find a place to hide/store them at home. A big plus if you have inquisitive children…..or spouses.
–You get a better selection. You can put your items on layaway before the holiday rush starts. You won’t have to brave the crowds or pick from what’s left.
-You avoid the January blues when a credit card bills comes due. You can actually ENJOY the New Year.
-If you change your mind about the item(s), you don’t have to return it to the store. You can just give it back to them (some stores MAY charge a cancellation fee).
-If you find a great sale but cannot afford the purchase at the time, you can “lock in” the price and pay for it in installments….interest free, did I mention that?
-If the item goes on sale later for a better price, the store will usually let you take advantage of that sale. Some stores limit this price adjustment to one time.
-If you don’t complete the sale you don’t have to worry about credit card companies calling you in the night threatening to eat the bread off your plate.
Of course, there is the flip side to the coin.
–Limit ONE to the price adjustment (in most stores).
-If you cannot afford it all at one time, should you really buy it?
-If you have NO discipline, layaway could cause you to spend more…..especially if you dream big.
–If you miss a payment, your items will go back on the shelf and you’ll be out of your service fee and perhaps have to pay a cancellation fee. Most stores aren’t so hard core that they keep your money. It will usually be refunded, although sometimes it’s returned in store credit.
–If the store goes out of business, you’re in trouble.
Barry and I will always prefer to shop with cash, but if you don’t have that option then maybe layaway is for you.
Remember, don’t use your credit card this holiday season. Are you with me?
Stacy and husband Barry are debt free bloggers and recently gave their debt free scream on the Dave Ramsey radio show. You can read more about Stacy at her blog: www.Stacymakescents.com
I love the overall theme of this post, “don’t use credit cards for purchases,” which is so very true. However, I’m with a sort of different thought process, if I don’t have the money and my expenses are barely being covered by the money I do have, then my gift giving will be limited to my own child(ren) until my situation improves. Everyone else will get a nice family picture or Christmas card. As for my own child(ren), if my situation is very dire, then even they may not get as much as in previous years. I do think layaway is great for people who have trouble really planning on their own, but can start earlier in the year. I would think at this point in the game, it’s too late to stretch payments out before Christmas. If you don’t have the money by now, you just don’t have it (unless you’re expecting an end of the year windfall of money). However, if you’ve started in May, I can see how that would be beneficial.
tiannamae.blogspot.com
One other thing to note…if you only get paid once a month, like we do, layaway doesn’t work so well. If I remember correct you have to make payments weekly or every other. We have seriously cut Christmas spending year and it feels GREAT!
I agree with both of you! We are very minimal spenders….however, we counsel people who are not and who have trouble planning but would still like to give their children gifts at Christmas.
There’s the possibility that those who do not have the cash currently might see a great deal on a Christmas gift. Should they use a credit card? No…..for them, there is layaway – so they can pay for the gift when they do have cash, without missing the deal.
We do not use layway (the reason for my “con” of not buying it if you don’t have the money), but I would much rather tell someone to buy a Christmas gift via layaway than to use a credit card. 🙂
If you make a budget every month, you can plan for payments on your layaway weekly. Even though you might only get paid once, you still have a plan for where your money is going during the month.
I’m glad you gals are with me! Let’s kick credit to the curb! 🙂
I AM WITH YA!!!!! No more credit cards here…not now or never again! Learning to say NO is hard but feels soooo soooo good! 🙂
So this year we too have limited Christmas. I have an at home business of Miche purses so when Shells retire I tend to keep them for presents. I had to buy them so they are a tax wrtie off but also an excellent gift. Then I am also a Christmas shopper in Feb. when I get my taxes back. I also coupon so we are getting by better. My advice is make your own Christmas gifts. I started buying 16×20 (you don’t have to go this big, sometimes I do 5×7 or 4×4, depending on the person it is for) nice canvas’s at our local Michael’s when on sale( and I have that 25% off of sale items coupon) and some water based (never used oil as it stains everything, I learned the hard way) colored paints. I buy th efoam sponges. I got left over primer from painting rooms in our house. I paint the primer on the canvas when the kids go to bed and by the next day it is dry. Then I cover my kitchen table and on old cereal bags I give each kid their own colors. They go to twon and paint. We have done this a few times as Christmas, Wedding, House Warming, and Grandparents Birthdays. My mother in law even asked for a new one to match her new living room colors. Really this is a present that lasts and I have had friends start this in their families. As with the cereal bags they are washable and ready to the next painting time.
The other thing my kids love to do is to bake cookies for my family. Since my grandma became frail nobody but me has taken up the tradition of cookies and bars for the holidays. I ask everyone for their favorites and they get 1 pan of those. I politely as for a 9×13 pan, as I don’t have many, and they are always so excited they can’t say no. And every year is the same my dad is date bars, my mom lemon bars, my uncle Barry is 7 layer, my sister anything with chocolate, my uncle Pat is banana bread. And All the ingredieants last. I buy them with my coupons for next to nothing and put all the love into it and that is what matters at Christmas. That is what I want my kids to know, not how many presents they got.
This is the first Christmas without my grandma and I know these bars will mean so much more because I use her recipes. Please try this idea too.
No, sorry – I’m not with you. You pose the question – Why use a credit card if you have money in the bank? Answer – I get points. I have used a credit card for over 12 years and paid it off in full EVERY month. I have aquired around $1600 in points during that time without paying a single cent in fees – especially not $5-$10 for one layaway item. I agree that there are lots of people who should not use credit cards – but that doesn’t mean that nobody should use them.
Hi Nik, I know there’s a huge group of people who think like you. I used to be one of them. We put everything on the Discover card for cash back and paid it off every month. Until the month my husband suddenly lost his job. We found a way to pay it off quickly, but cut them up and went to a cash only envelope system. We spent fully half of what we did when we used credit cards simply because we had to think harder when handing over cash. And using cash hurt a little more than swiping a card. There’s no card out there with rewards high enough to couteract the power of using cash. I’d never touch layaway either by the way. But you won’t see me swiping a card instead.
I’m not sure I see how layaway is more affordable if you have to pay a $5 fee to use it. If you only put away $50 worth of stuff, than you’re paying an extra 10% not to have it right now. Sure, the more things you buy, the less percentage of your total you’re paying for the store to just hold it for you, but still.
We set aside a small amount every month in a bank account for Christmas. We earn a little interest on it, and learn to control our desire to have something now—if I want it now, I have to wait for the online funds to transfer first. A cooling off period for my own crazy case of consumerism.
I’ve been feeling very “grinchy” about Christmas this year, because no one on my Christmas shopping list needs anything at all. I don’t want to buy a token gift or spend way too much to get them something amazing. I find the idea of layaway to be no better than a credit card, because there are still fees and I know that I would go overboard.
My husband and I are on the same page with Christmas this year, and we have agreed on an idea that I am actually excited about, and we do not need to touch a credit card or lay-away! We are giving each family on our list a simple basket (made pretty with ribbon etc) with homemade sausage, bread, cookies, soup mixes in a jar, (thanks for the idea Angela!) and a jar of homemade jam. Everything will come out of our kitchen and hopefully they will enjoy the homemade goodies as none of them are stay-at-home people. I really enjoyed the Grocery Shrink Christmas book because it reminded me that to give a simple gift, that took a bit of effort and time is way better than a flashy gift from a store.