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Health & Fitness

Back to the 80's - Layaway

Are retail layaway programs making a comeback after practically disappearing for decades?

For better or worse, layaway is making a comeback. I heard a Black Friday commercial on the radio this morning for K-Mart pitching their layaway program. Layaway was most popular in the 70’s but I remember it most growing up during the 80’s. Commercials and store signs offering layaway were everywhere. I didn’t really understand much about it back then and by the time I was older, layaway was pretty much a thing of the past.

As opposed to credit cards where you swipe away and take home whatever you are buying (instant gratification), with layaway you make payments first then you get to take home the product. Most people hear “layaway” and immediately think back to 25 years ago when layaway programs were considered to attract the “disadvantaged”. Well, credit cards used to come with the same stereotypes but, believe me, I have seen many people who would not consider themselves disadvantaged who had a decent amount of credit card debt. Why did they have this debt? Because they got caught in the trap of “swipe now, take home now” mentality. At least with layaway, you are forced to somewhat budget for several months to pay off the product.

Layaway still comes with fees and charges. Retailers charge a fee which can be as much as 10%+. The risk is that if you don’t fully pay for the product by the time you need it (i.e. Christmas), you don’t get the product. The store may also charge a fee if you miss a payment or fail to pick up your product.

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Obviously, paying cash is the best idea but if you HAVE to purchase something, consider layaway over your credit card.

Lastly, there is actually a site called elayaway.com that allows you to purchase items online via layaway. This is definitely a clash of the 70’s and 80’s with today’s technology.

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This post originally appeared here.

Matthew B. Brock, CFP®
Senior Partner, Owner
Divergent Planning, LLC
matt@divergentplanning.com

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