Use Lay-Away To Avoid Debt This Holiday Season

When I was growing up, I remember my mother using lay-away for things like back-to-school clothes and holiday shopping. At the time, I didn’t understand the concept or the benefits, only that I had to wait longer to get the things I wanted to take home that day. As credit became easier to attain and more consumers switched to “charging” their purchases, most stores did away with their lay-away department. Not surprisingly, this popular strategy to pay for purchases before taking them home is experiencing a rebirth as a result of the economy. Many consumers are credit weary and looking for ways to avoid debt this holiday season. Here are a few tips that can help you get the most benefit from lay-away programs.

• Read the policy- As with any contractual agreement, take a moment to read and understand the store policy before making your first payment. Each retailer is different and while the concept is the same, not every store will have the same policies. Avoid problems down the road by understanding what each party is required to do and what penalties will be applied if the terms of the contract are not met. Pay close attention to payment due dates, lay-away fees, where and when you can make a payment and when your merchandise will be available.

• Make and stick to a budget- With lay-away you are required to pay for your purchases before taking possession of them. This is definitely a great way to avoid credit card debt, however it should not be the reason you go over budget this holiday season. Many consumers remain understandably cautious about spending money on non-essential items. The best way to avoid over spending is by determining in advance how much money you can afford to spend on presents or other holiday expenses. Keep track of purchases paid in full, bought online or placed on lay-away to avoid post holiday budget blues.

• Use cash for payments- The entire concept of lay-away should be to avoid debt and pay for your purchases while working within your budget. With that being said, some stores allow customers to make lay-away payments using their credit card. This simply makes no sense and defeats the purpose of putting the items on lay-away. Make cash payments and know that when you reach the end of your contract, your items will be paid in full.

• When to start- There are a few schools of thought as to when you should put items on lay-away. If you start too early you may miss out on sales and discounts. Waiting too long however might result in payments that are too high to comfortably fit in your budget. Check the store policy regarding prices (whether they honor future sale prices or discounts) and ask if there is a minimum or maximum amount of weeks for items to be on lay-away. This will help you determine when you should begin shopping and paying on your holiday purchases.

Not all stores offer customers the option to “lay-away” purchases however those that do are seeing a rise in the popularity of this service. With a bit of planning and attention to your budget, this strategy can reduce debt, increase savings and most importantly make it possible for every family to enjoy and afford a happy holiday season.