We aren’t too close to the holidays – yet anyways, but in a few months we’ll likely start seeing retailers talk about the holidays. Usually Christmas decorations start making their grand entrance around September/October.
Yes, that early.
Crazy to think about, right?
Every time Christmas rolls closer, so does the option for layaway. Now, I’ll be honest and say I am not a huge fan OF layaway in general. But I know many people who are.
Saving up and paying with cash is always going to be better than shopping any other way – but a layaway plan is ALSO better than putting your Christmas holiday on credit, too.
Layaway has taken off in the last few years – retailers have embraced the opportunity to lead people into installment plans that can helped their budget strapped customers make those purchases. Not only does it help the store, it also is a winning ticket for consumers who might not have had the means to pay otherwise.
We really don’t see any value in layaway, so we won’t promote on our website, although I know many who do promote. And many of you turn to us at the holidays and mention programs at various stores – we’re very aware of ALL the programs out there. But we intentionally push them aside – we don’t believe they are not a wise choice – we also believe that preparation by saving up in cash ahead of time is a better way to go.
Here are the advantages and disadvantages of layaway. The advantages:
No interest
Unlike credit cards, layaway doesn’t build up interest – which is great, for those of you who are trying to avoid the route of plastic. But it doesn’t mean you still won’t spend too much or make the mistake of using your credit card TO pay.
Regardless of if you are going to “pay it off every month” — one misstep and you will find yourself in a predicament of owing interest on your purchase.
Forces you to Pay
One of the best points of layaway is that it FORCES you to pay off your gifts before you actually GIFT them.
So it makes you save. But it won’t ensure you budget that money ;) If you can make the payment to your layaway account, then why not take the initiative to actually save the money earlier in the year?
Capture the Sale Price
Layaway allows you to grab the deal while it’s on sale – but, even a sale item can still be money spent. Just because it’s on sale doesn’t necessarily mean it’s a must have – it’s only a bargain if you truly NEED it (need not to be confused with want!)
Although there are some GREAT points about layaway… there are disadvantages too!
You have Fees
Layaway programs charge fees – they might not be interest, but they are initial service fees – then, if you can’t make the payoff of your items, they will also charge you to re-stock those items.
So “FREE” layaway isn’t really “free” in the end – right?
Changing your Mind will Cost You
Finding something on sale or special, or that you want that you can place on layaway is GREAT. But eventually.. if you are a bargain shopper and you look around elsewhere and find that EXACT item for less, then it will cost you.
Most layaway programs will charge you a fee for cancelling.
Can Ruin your Budget
Although many people may not realize that layaway may ruin their budget, it’s true, and it does. ANYONE can make payments on an item, no matter what the cost. And retailers know this – so instead of advertising the huge exorbitant price on an item, they will focus on the smaller payments. In reality, you might not be able to afford that.
If you can’t save up to pay for the item in full, then it shouldn’t be a purchase to start with – no matter what the payments equate to be.
Instead of Layaway…
Focus on starting your Christmas fund early -and pay your Christmas in cash. Create your Christmas budget early in the year – to find out how much you need to save focus on what you plan on spending. Then divide that total by the number of weeks you have left until Christmas.
Paying in cash has so many more advantages than paying in credit, and putting things on layaway – and just remember that in the end, the holiday shouldn’t be about the gifts in the end, but the time spent with family.