As a single parent, for years I was lured into a sales tactic that was perceived to stretch my single-income dollars. Over time, however, I discovered that what was supposed to help me to save more was costing more than I had bargained.
What tactic am I referring to? I’m so glad you asked!
Layaways.
They began making a comeback as families fought to recover after the Great Recession (2007-2009). At first thought, layaways seem ideal. After all, it’s a seemingly perfect way to pay for things over time without incurring debt and paying interest. But here are my personal observations as to why layaways should be carefully considered before agreements are entered in to:
False sense of affordability – When we don’t have to pay immediately, we tend to spend more. This is especially true if a store requires a minimum spending amount in order to extend a payment agreement.
Distress causes poor decision making – Inevitably things happen, but when things occur simultaneously with a layaway final payment due date, Oh. My. Gosh. stress levels shoot through the roof and credit cards and payday loans become our saviors. That is, until the bills and payment demand begin to stream in January.
Fees add up – Over the short amount of time granted to the consumer to pay, the small down payments and services fees can often add up to as much as (or more than) the interest one might pay on a credit card. Hmmmm. Makes you think right?
To sum this up, I do believe layaways are an alternative to avoid incurring needless debt. However, creating a holiday budget ahead of time (June-ish) and spending smaller amounts of money throughout the year on seasonal, yet versatile gifts, may serve your mind and wallet better.
I’d love to hear your strategies for avoiding overspending during the holidays.
$XO$,
Coach A
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