Layaway doesn't make sense to me

[disneysteve]

I read an article the other day (in Parade magazine on Sunday) that Layaway is making a comeback. The purpose of layaway always eluded me. If I want something and don't have the money for it, I don't buy it. I save up until I do have the money for it. Then I buy it.

Layaway is basically a credit card for people who can't get credit. Plus, unlike a credit card, you don't actually get the item until it is paid for. You "buy" the item, give a deposit and pay a fee. The store holds the item. Then you make payments to the store until you've paid off the item, at which time you get to take it home.

This seems like a huge burden on the stores, having to track all the accounts and store the merchandise. If buyers fail to pay off the items, the store is stuck with items that are then out of season or out of date, since the layaway might have been for 3-6 months.

If you can't afford something, don't buy it. Save until you can. Then buy it. Why is that such a difficult concept for people to grasp?

[mom-from-missouri]

It is basically for people who can not buget--or who are hiding gifts until they go pick it up.
One advantage is that if the price goes up on the item, you still get it for the lower price.
Around here the few stores that offer layaway do it for 45 days, and after a certain date seasonal items are not allowed to be put on layaway.

[disneysteve]

Originally Posted by mom-from-missouri

It is basically for people who can not buget--or who are hiding gifts until they go pick it up.
One advantage is that if the price goes up on the item, you still get it for the lower price.
Around here the few stores that offer layaway do it for 45 days, and after a certain date seasonal items are not allowed to be put on layaway.

Ok. The bolded stuff makes some sense. The hiding part not so much. Surely, you could hide something somewhere without paying for the service - a friend's house, your workplace, your attic, in the back of that closet that nobody ever goes in.

Locking in a price is also good. If something you've been saving up for goes on sale for a great price before you have the money saved up, you can lock in the sale price (plus the layaway fee), so using layaway could actually save you money.

45 days isn't too bad. The photo in the article showed a store window advertising lay-away for up to 6 months. Seems to me that you shouldn't be out shopping for anything that you know you won't be able to pay for until 6 months from now.

[mom-from-missouri]

I used it to buy a metal stock tank at the feed store when we saw the metal stocks where going up. I bought it for $250 and picked it up 30 days later. On the day I picked it up, the same metal stock tanks were $309.

Here, there is no fee for using layaway. You put 20% down at time of purchase. If you change your mind, you get it all back. So a lot of people use the little discount store here to keep their Christmas presents at. Dec 23 they are open late so parents can pay the balance and pick up the toys...

[creditcardfree]

I don't really get it either. My best friend has done this ever since we were in high school. Based on my experience, it does seem to be for people who can't save...even for a short period of time. My friend has moved up to credit cards and loans...but I think the saving up first still eludes her.

[whitestripe]

when i was in high school i used it a few times. obviously i was unable to have a credit card at 14, and my mum did not pay for much of anything for me. i earnt $107 a fortnight, but did not want to spend $79.95 in one week on a nice pair of jeans (i did not own a pair of jeans at that time). i also had to pay for my own school fees, school uniforms, school books, bus fees and anything else i needed or wanted other than food from that $107. if i 'saved' for it, the jeans in my size would be gone, and probably by that time it would be the middle of winter and everything would be out of stock, and they probably would have spring and summer wear out by then. a bikini would not be that much use for me then. i put down $20 on those jeans, and paid $10 or $15 every week. i can't describe the feeling of getting those jeans having paid them off over such a long period.
i also did it for a tent and a sleeping bag, when i was 16. so, for me, there are certain situations where laybuy (which is what we call it) does make perfectly good sense to me.

[Seeker]

Originally Posted by disneysteve

Layaway is basically a credit card for people who can't get credit.

.... or have max'ed out their credit.

My mom used to do this because they were "cash-and-carry." Mom never drove a car in her life.... therefore she used it whenever she wanted to buy something that she'd need one of us to help her pick-up and take home.

Many stores stopped doing "layaway" plans because they weren't being used. But it looks like this was "revived" last year because of the economy.

[adam_c]

Originally Posted by disneysteve

If you can't afford something, don't buy it. Save until you can. Then buy it. Why is that such a difficult concept for people to grasp?

Actually Steve, I think this is a common form of saving up until you can buy it. I grew up with folks who put the kids school clothes on lay away. It was for things they knew they needed, but didn't have the money at that moment. It goes on lay away, you know the item will be there 45 days from now and you are forced to go in and make a payment every week until it's paid off.

It's delayed gratification with a twist. You actually have to spend the money before you get the item. For most of the people I know who used it, this was the closest to financial discipline as they ever got.

[disneysteve]

Originally Posted by adam_c

It's delayed gratification with a twist. You actually have to spend the money before you get the item. For most of the people I know who used it, this was the closest to financial discipline as they ever got.

I guess in a way, layaway actually is a better system than a credit card. You don't get the stuff until you pay for it. That's better than getting something you can't afford and taking a year or more to pay for it.

[Broken Arrow]

In general, I don't really get layaway either. Based on the responses, I see now why it can be useful for others, but I like to keep things simple. To steal a line from Yoda, "Buy or buy not. There is no layaway."

[wnlbutterfly]

Let me say I rarely used lay-a-way. However, there are no fees, no interest (like a CC), you have the item in hand that you want and know it has been set aside for you (like with the jeans in the right size). If that item goes on sale, you can go in and have them take it off lay-a-way, then ring it back in at the sales price as well. I only know this because my mom worked at WM for 15 yrs. Anyway....when WM stopped they said "well, customers can just use our WM CC". A lot of people that use layaway don't have CC or are maxed. And again, they are forgetting that using a CC means you are paying more for it, because I seriously doubt they pay it off as quickly.

A lot of people in this area would go shopping Thanksgiving weekend and pick out the gifts and put on layaway because if they had a Christmas club account it didn't pay out until the first of December. And yes, it means the items aren't at home where little prying eyes can see. I think it would also help some people budget for the holidays better, because once they had it all picked out, they were done and knew how much they were spending.

They quit offering it because they don't make any money on it, and they make a LOT of money on their WM CC. I think it is K-Mart that has brought it back.

OH, and another upside is if they picked something out on impulse, it gives them time to rethink it, and they can still cancel and get the money back.

[disneysteve]

Originally Posted by wnlbutterfly

Let me say I rarely used lay-a-way. However, there are no fees

The reason I mentioned a fee is because the article I was referring to said there was a fee, so apparently some retailers do charge for the layaway service.

Thanks for all of the responses so far. There do seem to be some times when layaway isn't such a bad deal. I'm still of the bottom line opinion that you shouldn't be out shopping for things if you don't have the money, but I can see how it amounts to forcing you to save up for what you want. Instead of saving in your bank account, you save by making payments to the retailer. At least you don't get the item until you've actually paid for it. Like I said, that beats how many people use their credit cards.

[financialnut]

Layaway has its uses.

My wife works at a higher-end retail clothing place that doesn't bring in a ton of stock on each item offered. We're on a budget and sometimes what she wants is too expensive for us in the given month.

She puts it on layaway so nobody else will take it. Then a month later we make the purchase.

[disneysteve]

Originally Posted by financialnut

Layaway has its uses.

My wife works at a higher-end retail clothing place that doesn't bring in a ton of stock on each item offered. We're on a budget and sometimes what she wants is too expensive for us in the given month.

She puts it on layaway so nobody else will take it. Then a month later we make the purchase.

Please don't take offense at this. It is not meant as such but wording and tone online can sometimes seem that way. I'm asking out of curiosity of how others do things since the concept is rather foreign to me.

If your budget is such that your wife is buying clothes that you guys can't afford to pay for at the time of purchase, isn't that a problem? My gut reaction to your post is that maybe your wife is spending too much on clothing and shouldn't be shopping in a high-end shop. Obviously, I know nothing about your situation, but reading your post, that was the first thing that came to mind. I apologize if I'm reading too much into that.

I realize we are the oddballs in this regard, but we simply don't buy things we can't afford to pay for. That doesn't mean we use cash for everything. We use our CC as much as possible, but pay the bill in full every month. We don't use the CC because we don't have the money at that moment. We use the CC for convenience and to earn rewards. In my mind, layaway is just another form of credit that allows you to buy things that you don't yet have the money for.

[boosami]

Originally Posted by disneysteve

If your budget is such that your wife is buying clothes that you guys can't afford to pay for at the time of purchase, isn't that a problem?

Maybe her monthly clothing budget is $50 and the item costs $100. She decides that she will forego spending $50 next month and instead combine it to get the $100 article. However, she doesn't have the $50 from next month yet, and by then the article will be out of stock. Layaway allows her to reserve it, and pay for it with cash originally intended for it in her budget. That would be responsible use of money and layaway.

[Joan.of.the.Arch]

Well, I think I've learned here some good reasons for some people to use layaway. I've always been puzzled about it myself.

Once I met a man who told me that his father long ago ~before the years of discount retailers/big box stores, and before welfare existed~ had a shoe store in a very poor neighborhood. He said he knew that his father was sometimes criticized as exploiting the poor through his business. He did not go into detail and it was not clear to me what that was about. He defended his father, saying that his father had a layaway system in which he took as little as $0.10 per week toward a purchase. He said that his father was actually helping the poor this way....I did not understand. Some of the reasons given above might apply, I guess.

[disneysteve]

Originally Posted by boosami

Maybe her monthly clothing budget is $50 and the item costs $100. She decides that she will forego spending $50 next month and instead combine it to get the $100 article. However, she doesn't have the $50 from next month yet, and by then the article will be out of stock. Layaway allows her to reserve it, and pay for it with cash originally intended for it in her budget. That would be responsible use of money and layaway.

That makes sense. Again, no offense intended. I just wasn't sure how to read your post.

As Joan just said, I've learned some valid reasons for using layaway in this thread, things that I never understood before. Thanks, all.

[swaymonae]

I think it's smarter than using a credit card. If it's in danger of being sold out and I didn't want to put it on a credit card, why not? As long as I can actually afford, however....

If I can't afford it, .. then I'm just not going to do it.

I'm the type of person who puts all her extra money in savings-- so it's out of reach, so I usually don't have a lot of "extra" money in my checking account. Furthermore, when it has reached my savings, it's there for good. I don't like taking money out unless it's imperative. So in this particular situation, it's not a bad idea.

[Ima saver]

I used layaway a lot when I was much younger. I would pick out christmas presents early and put them on layaway. Then I would go in every week to make a payment and everything would be paid for by christmas. There was never any fee. I also work as a teen in a dress shop and we had layaway there too. That is how I purchased most of my clothes, on layaway. (I started at age 12 and only made $3 a day)

[savingmama]

Originally Posted by disneysteve

If I want something and don't have the money for it, I don't buy it. I save up until I do have the money for it. Then I buy it.

If you can't afford something, don't buy it. Save until you can. Then buy it. Why is that such a difficult concept for people to grasp?

sorry to go off on a tangent, but reading Steve's first post totally reminded me of the Saturday night skit called "don't buy stuff." It is pretty funny. You can watch it on hulu.com if you haven't seen it before.