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Last year, I put too many presents on my credit card. It took a long time to pay back. I want this year to be different. I figure that if I use layaways, I can avoid having credit card bills in January, but I've never used layaway before. Can anyone give me some advice on how to do it and what stores offer the best programs?
Layaways are good. Toys "R" Us® has layaway and so does Walmart. I use Walmart more for electronics and expensive toys. I try to put down a good amount. It helps in that I do not go overboard and buy everything in sight.
Cynthia (via Facebook)
It may be wise to put gifts on layaway this year, but starting in January, put away 1/10 of the money each month that you will need for next year's gifts. By October, you will have the money you need and will not be paying layaway fees. Some banks still have Christmas Accounts, which can be used for this or any other purpose. Also consider buying out-of-season gifts in the spring for next winter's giving.
Layaway costs extra money in some stores and that adds up. If there is a set fee for a layaway account, put as many items as possible in the layaway at one time to avoid additional fees. Be sure to pay in plenty of time for the holidays.
Since I don't know where you live, I cannot specifically answer which stores have the best layaway. In my area, Kmart and Walmart are the only stores offering layaway, and for the holiday season, they are waiving their fees.
Ask the store for their layaway policy and fees. In my state, they have to give you a copy of the policies and fees for you to read before you sign up.
The last time I used layaway, it was for a maximum of 12 weeks and the fee was a percentage of the total plus $5.00. The balance was paid in weekly payments for the next 11 weeks. At the time, I was on a small budget, and this system forced me to change my habits by making a commitment for my Christmas gifts. I stayed with my monetary commitment and my holiday budget. After the holidays, I tried to save a small amount each pay period for all gifts I give throughout the year.
Layaways are a great idea and some stores like Kmart have it via the internet also. I have always used Kmart layaways, and this year they have omitted their service fee. You pay a down payment 10-20% and pay on it every two weeks. Walmart also started their layaway again, but I have been hearing that they have a few restrictions (such as you can't put anything under $10 on layaway). Both are good and offer the "pay over time" feature without the "pay over time with interest" feature (that credit cards do).
Layaway purchase plans are designed for people that want to purchase merchandise, but cannot pay in full immediately. Many different kinds of layaway plans are offered in places such as discount department stores or specialty stores selling appliances, jewelry or clothing.
Layaway plans require that you make installment payments on the merchandise. You receive it only after you pay the full price. Each store establishes the terms for their layaway plan. Most layaway plans involve making a deposit (usually a percentage of the purchase price) and paying the balance over a period of time until you have paid for the item in full. In return, the store retailer will hold your product until it is paid for.
Unfortunately, there are some problems you can experience if your understanding of the layaway plan is not up to speed. There are some key ways to avoid layaway problems.
Don't forget that until you finish paying for the layaway item, the store retailer has your money and the merchandise.
While it's too late to help for this Christmas, there are a couple of alternatives to layaway that can be even more cost-efficient.
Figure out your holiday spending budget, divide by 12, and set aside that amount in savings each month, like a DIY Christmas Club. It takes away the pressure of paying for all those gifts at once, plus you can dip into the fund if you find an amazing deal on a perfect gift earlier in the year, and just stash it away. You also aren't limited to items in stock during the holiday shopping season at one particular store.
Another idea is when shopping for a friend or loved one's birthday gift, purchase their Christmas gift at the same time. Assuming you remember most of the people on your Christmas list on their birthdays as well, this stretches out the gift buying throughout the year.
If you really want to stretch those dollars and avoid the holiday shopping crowds, hit the after-Christmas/end-of-season sales for next year's gifts. While certain items such as food obviously can't last a year, many items like accessories (hats, gloves, scarves, jewelry), bath and body goodies, toys, books, games, etc. can easily be stored until the following Christmas, and at half-price or less, that's quite a bargain. Just make sure to avoid anything uber-trendy that will likely be outdated in a year, and inspect everything before stashing it away, in case anything needs to be returned, which you won't be able to do next December.
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