Thoughts on Layaway and Last-Minute Holiday Shopping

As a child growing up in the 80s, I still remember the layaway counter at our local Walmart. Tucked in the back of the store, the desk was often hidden by a huge line of shoppers with carts full of stuff – especially around the holidays.

For a long time, layaway was seen as a smart way to save up the money for Christmas gifts. If you didn’t have the cash to shop early, layaway let you select items when you were ready then pay for your gifts over several weeks or months.

Most stores asked you to put a deposit down equivalent to a certain percentage of your basket, say 10%. That way, you had some “skin in the game” and were less likely to leave your layaway to rot. Once your layaway was stashed away in the back of the store, you would stop in to make monthly payments whenever you could. Eventually, you would pay down your bill and take your items home.

And boy, those were the days.

Of course, layaway still exists; it’s just a lot less prevalent and not always offered year-round. At Walmart, for example, layaway season starts in September and ends in mid-December. Other stores like Marshalls, Burlington Coat Factory, Toys ‘R Us, and Kmart still offer some type of layaway plan for customers at least part of the year.

Why We Choose Credit Card Debt Over Layaway

Still, it’s not nearly as common to hear of a family member or friend who uses layaway in 2016. Nope, today’s shoppers are more likely to charge their purchases to a credit card and worry about how they’ll pay later.

Why the seismic shift in how we shop? In my opinion, it’s all about instant gratification. Where layaway forced you to save up for what you wanted and make payments all along, credit cards allow the opposite. With a credit card, you can have what you want now, and then worry about how you’ll pay. You don’t have to wait, nor do you have to save up a dime. You just walk in the store and take what you want, then pass the buck to the “future you.”

Unfortunately, the “buy now, pay later” mentality has become the American way. A recent analysis from Value Penguin shows average credit card debt for households who carry a balance rang in at $16,048 while average consumer debt across all households was $5,700. Meanwhile, households with the lowest net worth (zero or negative) reported an average of $10,308 in credit card debt.

These huge debts we carry aren’t the exception; they have become the norm. In 2016, it’s perfectly normal to finance everything you buy – and not just your home. These days, you’re almost expected to finance your car, your clothing, and even your smartphone. Unfortunately, we pay for the privilege of borrowing dearly – and not only in interest payments, but in the stress debt adds to our lives.

Why I Miss Layaway

Is layaway a complicated way to pay for your holiday gifts? Yes. But was it a smart way? I certainly think so.

For starters, layaway forces you to understand exactly how much you’re spending on the holidays. And since layaway orders had to be paid off before you could take your stuff home, you were forced to spend within your means.

Second, layaway didn’t let you enjoy your purchases right away. Instead, you had to endure the arduous task of paying your entire bill off first. In that respect, it forced you to delay gratification and the joy that comes with buying something new.

Lastly, using layaway forced you to plan. To successfully use layaway to fund Christmas, you had to shop for your holiday purchases months ahead and make sure you could afford to pay your gifts off before the holidays hit. This represents a huge difference from the way people shop for the holidays now. I mean, why save money ahead of time when you can shop last minute and charge everything to your credit card, whether you can actually pay for it or not?

How to Create a Last-Minute Layaway Plan

I didn’t use layaway this year, and I’m not entirely sure any of the stores in my area offer it anyway. Still, I cobbled together my own holiday layaway plan in the form of a targeted savings account I opened this past summer. And ever since then, I’ve stashed away a few hundred bucks per month to reach the $800 I wanted to save before December 1st hit.

While it’s definitely nearing crunch time for holiday shopping and saving, here’s how you can do the same:

  • Figure out how much you should spend on the holidays. The National Retail Federation reports that the average consumer will spend more than $900 on holiday gifts this year. Hopefully, you can spend a lot less. To figure out where you stand, create a list of people you need to buy for and assign each a dollar amount. Tally up your list to figure out a grand total for your holiday shopping list.
  • Look for ways to save. If your list is bigger than you can reasonably afford, finding ways to save is your best move. Determine whether you can opt out of any specific gift exchanges and ask family members if you can skip gifts this year. Also consider making some homemade gifts instead of buying everything at the store.
  • Start setting money aside every week. Even though you don’t have a lot of time, you can still save up a reasonable amount before the holidays if you start right now. Start saving as much as you can weekly or on paydays.
  • Plan to shop right before the holidays – or shop as you find the best deals. As you get your last-minute layaway plan underway, you can decide how to move forward. The way I see it, you can either a) wait until you have as much money as you’ll be able to save before you shop, or b) scour ads for the best prices and “shop as you go.” With Black Friday, Cyber Monday, and plenty of other huge sales coming up, it might make sense to take advantage of the best deals as you find them.
  • Do the best you can, but don’t be too hard on yourself. It sucks when you can’t afford to buy for everyone on your list, but it’s not the end of the world. A handwritten card can tell the people you love how you feel without costing much at all, and most people don’t really expect a gift anyway. If someone is disappointed this year, they’ll just have to get over it. When it comes to your financial health, you have to put yourself first – holidays or not.

The Bottom Line

Layaway might be fading away, but that doesn’t mean we can’t learn something from it. While it isn’t the easiest – or more convenient – way to shop for the holidays, layaway did help people stay out of debt.

If you want to avoid debt this year, the time to start saving is now. Stash away as much money as you can weekly or on payday. You might have to make a few cuts to your holiday budget, but you still have time to do the best you can. While buying less may not be ideal, it’s a whole lot better than starting a brand new year with a pile of credit card debt.

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Do you remember using layaway growing up? How do you save for the holidays?

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