Layaway's Comeback for the Financial Crunch

There was a day when shoppers did not need schooling in layaway. (Sears' new ad explains it in 3 steps, as layaway makes a comeback for the financial crunch holidays.) That is, boomers grew up with the concept of paying for a product before taking it home, and then we invented credit cards, which might be called the takeaway model. Purchase, take home, use, and hope the object has a lifetime longer than the payments.

Buying on credit wasn't really invented by boomers, of course. For centuries, farmers and ranchers lived on credit—with the farm co-op and the mercantile waiting patiently for payment. In those days, merchants knew that money would come after harvest or market. Mortgages were sometimes handled the same way, except "harvest" meant you'd have the money someday after an elder died. What did you think "bought the farm" meant?

Layaway came in and out of fashion and today it carries a connotation of having bad credit (hence the requirement to pay for an item in full before taking it home) and that reputation probably hastened layaway's demise after credit cards became common. But the reputation doesn't tell the real story. I grew up knowing that:

• layaway permitted me to choose a particular item that might not be available a few months later because store shelves were stocked differently in those days,
• layaway gave me a safe place to put my money because bank accounts for children were rare in those days,
• and layaway was my way of keeping my money committed so that family members could not claim it. (It was an unusual household: all available money was to be spent as quickly as possible but debt was honored. And my layaway commitment was viewed as a debt that I had to tend.)
  

If I consider those childhood experiences from the 1960s, I can project what layaway must have meant to adults, especially women who might never open a bank account. A favorite fabric could be put on reserve. The store's cash register was safer than a coffee can for saving money. And by taking extra money to the store every week, a woman could prevent anyone else from squandering it.

Layaway was direct money management. And that's probably what it is today. My guess is that most of the people who are reviving layaway have credit cards in their wallets. They are choosing a different model that is more deliberate and more concrete. And just may help get them get through the holidays.

© 2008 Mary Bold, PhD, CFLE. The content of this blog or related web sites created by Mary Bold (www.marybold.com, www.boldproductions.com, College Intern Blog) is not under any circumstances to be regarded as professional, legal, financial, or medical advice. Or education advice. Or marital advice. Or even a tip.

Financial Crisis: Retailers Will Help Us

In their best interest. Retailers will help us in the hard times, knowing full well that special promotions and discounts will help us feel safer in spending in their establishments. Even as most Americans slow their spending, they won't forego shopping altogether and retailers will garner the sales they can.

Recurring specials. A weekly special (such as a grocery chain's $5 family-sized dinner item every Friday) appeals to our desire for a predictable event, especially when other prices are unpredictable. "Affordable" counts, too, of course.

Dollar menus. Watch for more low-cost single items at fast food restaurants. Keeping us accustomed to the drive-though is important for business.

Comfort food. Soup has always been a low-cost staple in the pantry and in rough economic times, it serves as a comfort food, besides.

Stocking for the holidays. Christmas retail displays are already launching. Consumers will act earlier than usual to "protect the holidays" because of fear of not having money a few months from now. If the current financial crisis were not so obviously associated with banks, we might even see a resurgence of Christmas Clubs (savings accounts timed for holiday withdrawals). More likely, consumers will deal directly with retailers either in making early purchases or starting lay-away plans.

On a personal note. I have my own Christmas lay-away memory. Following a lay-off 20 years ago, our family moved from Florida to Texas one very hot summer. While Tom was coming to a job (and we knew enough about the semiconductor industry to be grateful for that), we were definitely wary about spending money. In house-hunting, we looked only at foreclosed properties (and bought one). In selecting a local bank, we intentionally chose the one that had just been taken over by a larger bank six months before. And I went to the new Hypermart (some boomers will recognize that name) and placed all Christmas gifts on lay-away. I made a modest weekly payment from August to December and felt comfort in having provided for the holidays. I probably spent less than usual simply because of my early and deliberate shopping. But the real purpose (and result) was the systematic payment toward a goal—just in case there was another lay-off. An ironic twist: a month into the job, Tom's new employer announced that all managers would take a 25% pay cut for four months (September through December) in order to avoid lay-offs among the workforce. We were already in cautious mode, so we weathered the pay cut but the budgeting was strict that year. The memory makes us appreciate the difficulty young families may face in the coming recession.

© 2008 Mary Bold, PhD, CFLE. The content of this blog or related web sites created by Mary Bold (www.marybold.com, www.boldproductions.com, College Intern Blog) is not under any circumstances to be regarded as professional, legal, financial, or medical advice. Or education advice. Or marital advice. Or even a tip.