Pay as You Go But Not With a Chicken
by Mary Hunt
It#146;s not easy being a consumer these days. In fact it can be downright confusing because of all the payment choices. First you have your cash, your checkbook and credit card. And who can possibly forget the debit-card, deferred billing, skip-a-payment, nothing down, no payments and zero-interest till the next millennium. See? Confusion pure and simple.
Prehistoric consumers had it easy. Just one choice: chickens. They traded poultry for the things they needed. The rules were simple: No fowl? No food, fun, futons, fillies or fricassee.
Then along came the invention of currency and that gave consumers a second choice#151;one that caught on quickly since folding a chicken to fit neatly into one#146;s wallet was, shall we say, messy.
A third option was born the day some unknown retailer came up with a payment plan, surely named in memory of the good ol#146; chicken days#151;layaway. Which brings me to the topic of this month#146;s article: What happened to layaway anyway?
Not that long ago, every major department store in the country allowed customers to buy merchandise on layaway. The item was placed in the back room and customers could take all the time they needed to pay it off. Interest free. When they made the last payment, they took the item home.
Layaway was simpler, upfront. There was a start and a finish. There was delayed gratification and a sense of responsibility and anticipation. With layaway there were no surprises. The layaway pay-as-you-go method for holiday shopping was particularly effective because it produced none of the fiscal shocks that come with today#146;s post-holiday credit card bills.
Without much notice, layaway programs started to disappear in the 1980s. Extolling the virtues of consumer credit, retailers convinced consumers it was better to take everything home right away, avoid those annoying progress payments and then commence to pay for it for the next 15 or 20 years. They did such a good job of convincing, layaway plans all but disappeared. But they did not disappear completely and for that I say, rejoice!
You#146;ll be happy to know some of your favorite national chain stores still offer layaway. Just visit the local K-Mart or Wal-Mart, two stores where layaway programs continue to thrive. Others include Marshalls, TJ Maxx and Circuit City. Many small independent retailers are more than happy to set up a layaway plan, they just don#146;t talk about it. You must inquire.
While cash up front will always be the best choice, making payments on layaway is much better that making payments on a credit card account because:
The store keeps the items until it is paid in full. No debt is incurred.
There are no interest charges, although some stores charge a small layaway service fee and restocking fee if you cancel.
Typically the customer is protected if the item goes on sale during the layaway period and the price of the item is reduced accordingly.
There is no legal obligation. If you change your mind, you can get a refund.
Clearly, layaway and early holiday shopping were made for each other. Getting started ahead of time in the off-season means you#146;ll be less likely to fall into the trap of weary, last-minute shopping when everything is expensive and you are prone to buy frivolous gifts just to have something#151;anything#151;to give.
To avoid misunderstandings, get specific information about a store#146;s layaway terms before you participate. Ask for a written description of the store#146;s plan, and read it before you agree to a layaway purchase.
No matter how you choose to do your holiday shopping this year, make sure you start early. And pay as you go with cash#151;which remains just slightly more convenient than chickens.
Mary Hunt is the founder and publisher of Cheapskate Monthly newsletter and is a respected authority on spending habits and financial responsibility. She and her husband Harold dug their way out of a horrible mountain of consumer debt and lives to help others get out of debt and live joyfully beneath their means. The door is always open at her popular Web site,
www.cheapskatemonthly.com
Permission granted for re-print on DrLaura.com.
