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Yeah, I Got It On Layaway. What About It?

I applaud the return of installment payments as a shopping option. There's just this one thing.

The buy-now, pay-later mentality of credit cards has been a major factor in reckless and irresponsible consumer behavior. Replacing layaway plans with easy access to high-interest credit has had devastating consequences for lower- and middle-income families, and black people in particular. The public embarrassment of buying goods on layaway (an admission that you were too poor to just buy what you wanted outright), has been replaced by the private shame of crushing credit card debt. I’d rather see people use layaway to save toward buying that flat-screen TV outright, than watch them use credit cards to borrow the money to buy it now, only to pay several times it’s retail price in interest and fees for months and even years after the purchase.

But now, with Americans struggling with high unemployment, job insecurity and a difficult economy, and retailers desperate to lure shoppers back into stores, layaway is making a major comeback. Now retailers including Sears, K-Mart and Toys-R-Us are trumpeting installment payments as a time-saving, cost-effective option for those looking for the ways to reduce pressure on limited household budgets. There are even online layaway service providers, such as eLayaway, allowing shoppers access to a variety of participating retailers. I think that’s a good thing, and Gumbs agreed with me. There’s just this one little thing:

“My issue with Sears targeting blacks in barbershops for online layaway is: How do you think they’re making online payments for their layaway?,” says Gumbs. “I’m betting it’s with those same high-interest credit cards (the accepted online payments are Sears Card, Sears MasterCard, Visa, MasterCard, Discover, American Express, Sears Gift Card, PayPal).”

Ruh Roh! She had me there. Using credit cards to make installment payments on that giant flat-screen cancels out the primary benefits of layaway plans, at least in terms of encouraging financial discipline and the save-for-what-you-want mentality we need to embrace if we are to avoid excessive debt, maintain a positive household net worth and ultimately build wealth for life.

I still applaud the comeback of layaway. But if you’re going to choose this option, do it the old-fashioned way. Make installment payments with the money you actually have in your pocket. (Or in the bank, if you can use your debit card. But you’ll have to monitor your bank account like a hawk to make sure you keep balances high enough to avoid overdraft fees if there’s not enough in the account to cover your layaway payments). Please, please don’t use credit cards to borrow money to make layaway payments.

Alfred Edmond Jr. is the editor-in-chief of BlackEnterprise.com

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  • shai

    yes I agree with your ending statement of how we fell into a death trap with credit cards. Yet in your comments and you left out three important issuses we as black people not yet grasped.

    1. We choose not to place the importancy of what direction our hard earn money leads us,why we make the decisions how we spend our income,where is the optimal places our money is best utilize to us individually and collectively as a black community and who hands we place our trust with our money , surely not YOU KNOW…YOU KNOW.

    2. We do not prepare our children with the education of what is needed to justify our purchases when society say we must and should have IT.

    3. We as a Black community with a plethora of enterpernuers,ceo’s,financial experts,
    mathematicians,scientists,community activist,political and religous leaders, fathers and mothers has not made a unifide stand to rectify the FINANCIAL AND EDUCTIONAL GENOCIDE OF OUR PEOPLE. INSTEAD SELL WE BOOKS,CDS, AND SEMINARS OF FALSE DREAMS.

    Sadly we continue attaching ourselves to every ohter race when they clearly have shown their distrust, lack of respect, they continue with their metastatic races beliefs, with little no desire to join forces with us to make our world better for the human race.

    You my brother instead, sided with the establishment of slugs of this world who pimps us with their propaganda garbage,into having false sense of selfish entitilment.

    At the end of the movie School Dazes by Spike Lee, the student rings the bell (the bell of atonement) and says…..WALE UP!!!!!!!! (MY PEOPLE WAKE UP!!!!!!!!)

  • http://blackenterprise.com Alfred Edmond, Jr.

    In response to Shai:

    1. Who’s “we”? Like most sweeping generalizations, sounds like a broad, speculative assumption not based on actual research and observation.
    2. Aren’t books, CDs, seminars etc., the usual tools for teaching? Does not their very existence contradict your assertion that no effort is being made to rectify “the financial and educations genocide of our people”?

    I am hopeful that you are contributing to the education of our children and community in the area of financial education and smart consumerism. Alarm bells have their place, but the real difference is the work done after the bell of atonement is rung.

  • http://www.dreamandhustle.com Ed Dunn

    This is a great article because layaway demonstrated fiscal responsibility.

    When I was a teenager in the inner city, me and my peers would work a part-time job and put the money on layaway at Footlocker or at the Department store. Layaway taught us how to save up for our goal instead of the ‘charge it” instant gratification.

    I’m glad to see it coming back so I can teach my kids how to save up for that item in the window.

  • Stephanie

    This is a really terrific article and I applaud you for writing it. I grew up with lay-a-way and my parents shunned debt. They are now less than 1 year from paying off their home and have banked my mom’s salary and lived completely off my dad’s for 15 years. I put things on lay-a-way now and teach my children that it’s a much better way to pay…I’d rather see them have delayed gratification that debt.

  • http://twitter.com/algierslady Pearl Forbes

    Yes, layaway is good for large companies and people with limited resources. Layaway is bad for the small business that need to pay their bills within thirty days. I HAD a Gift Shop that sold “All God Children” figuerines. When a new figuerine came out, people would flock to the store to place pieces in layaway. Although half of the cost was paid in layaway, it was not enough to pay the Company for the figuerines. Layaways are not for small businesses struggling and just happy to have business.
    I also understand the credit card. I purchased from TD Jakes an Empowerment Program for four installments of $49.50 on my credit card which took forever to pay off… The paying off of the debt was more empowering than the program. Smile.

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