Pay now, get later: The return of layaway

Facing a dismal holiday forecast, some merchants have exhumed a long-slumbering buying plan, layaway. Today's New York Times article, "The Last Temptation of Plastic" describes how Americans defected to the credit card in the '70s, preferring instant gratification and convenience.

In the 1960s, when I came of shopping age, all department stores offered layaway. I remember timing my payments to coincide with the big dance, when I'd have made the last payment on my twirly new skirt that very afternoon.

Layaway was great: no carrying charges, the assurance that the item was nestled in a backroom for you, the payments ticking down to zero. I had to discuss any layaway purchases with my parents. (You can get over your head with layaway, since the item would only be held for a number of months. Though you could cancel the whole deal and get your money back, my mother viewed backing out as a black mark on her reputation with a merchant.)

Layaway taught me to budget and save. With an item on layway, I was a most willing worker. I accepted gigs with the Blantz brothers, little twerps who had broken the spirit of several other babysitters, because their mother's dollars (including a lavish tip for hazard pay) would bankroll a new Villager skirt and matching cardigan.

Contrast these habits, which I have to this day, with the seduction of credit cards. When the rest of the family went on vacation last month, one of my sons was given a Visa card for emergencies. We just got the bill. Restaurants, clubs, taxis: he spent many hundreds of dollars, lured by the plastic promise. (He will be paying every penny, including interest, through a reduction in his weekly allowance.)

In an effort to compete with hipper bix box stores like Target, K-Mart has revived layway, af
ter customers requested it. TJ Maxx and Marshalls brought back layaway, as has online retailer E-Layaway.com. 2008-era plans charge a modest restocking fee for a canceled purchase, but no interest.

Credit companies are betting we won't wean ourselves from our plastic addiction: average US household credit card debt
exceeds disposible income. But layway may be the Obama of personal finance, coming from way behind, grabbing people's longing for change, and winning.

10 comments

materfamilias said...

I grew up with layaway as an option as well, and I was able to teach my daughter to use it in the early '90s -- yes, that recently, there were still numerous small retailers that would do this and Eaton's would as well. Bronwen's a very wise shopper and very fiscally responsible now, in her early 30s, and I like to think we can take some credit (excuse the unintentional pun) -- being willing to surrender money for something that you couldn't have for another month or so meant learning to be sure of the differences between the quick-hit attraction you'd start doubting the next day and an item you'd love for months and months (probably not years; we're talking 14-year olds!).
I will still sometimes put down a deposit and ask my favourite retailers to hold something for me, and altho' I haven't tried for years, I think many of them would do layaway as well, altho' the computerized accounting systems of the day may not make that easy.
Reminds me of Georgia O'Keeffe not using anything she bought for a year; truly, she'd store it away for a year before using. Now THAT would really make you think about what you needed or wanted -- that's some restraint!

Deja Pseu said...

I'm old enough to remember layaway as well, though I also recall there may have been some extra fees involved, which was why it never seemed like a great idea to me. But I can see where it would be a great tool to teach budgeting, and help learn to delay gratification and stay out of debt.

Duchesse said...

materfamilias: Browen has good habits! Wonder what it will be like for young people who have only known credit cards.
Deja Pseu: None of the stores I dealt with charged fees, but then I also remember getting a free shoehorn with your shoes! Now they might, but it would have to be minimal to compete with cards.

Isabellisima said...

I'm a reasonably young person who only really remembers credit cards and I think layaway is a genius idea. I first encountered it in 2003- it's how I was able to buy my full set of matching Mulberry luggage. It was offered by Marr's the leather goods shop in Norwich, UK (where I lived at the time), and I thought it was a brilliant way of building customer loyalty. I also know of an antique jewellery specialist who still offers layaway.

I'm not very good at random saving, but I have found the delayed gratification actually added to the enjoyment of my purchases. Every time I see that impossibly chic luggage I feel a deep sense of inner contentment!

Duchesse said...

Isabellissima: You describe so well the pleasure of paying first (and what a purchase)! Fine jewelers and antiquarians maintained the layaway option durng the decades when other vendors dropped it.

A friend of mine bought an antique chair this way; she'd drop by every Friday to make a payment and visit her chair. She said she missed stopping by once the chair came home.

elke said...

My favorite pin will turn 40 in January -remember Birks' Plum Sale? I think it took me until May to bring it home, and it's one purchase I have never regretted.

Duchesse said...

Elke- Yes, and (seeing all the sales in the Globe and Mail) I'm wondering if Birks will bring it back. Forty years of enjoyment is a wonderful buy.

Karen said...

YOu know, it's very telling to me that Nordstrom is still PACKED with eager shoppers. You would never know there's a recession on; this proves to me the power of the plastic. Americans just can't seem to stop WANTING, NEEDING or CHARGING. How in the skids do we need to be for us to stop shopping!

Sisty said...

How timely you are! THere was just an article this Sunday in the Washington Post on this very subject -- how layaway has lost the stigma of being associated with being poor, how it's a great strategy for resisting the impulse buy, and how it can serve as a really good weapon against running up credit card debt.
http://www.washingtonpost.com/wp-dyn/content/article/2008/11/29/AR2008112900091.html

Duchesse said...

Karen: I got an unsolicited credit card in the mail yesterday, and was annoyed. Capital One will hear from me.

Sisty: It's in the wind as people tighten their belts: layaway, swapping, sharing, DIY and even (yikes) doing without.