Layaway – Buying Clothes on a Budget

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I’m bringing Layaway back!

That’s right… all the cool kids are using layaway again.  If you didn’t hear, don’t feel bad – I’m glad to shed light on this oft forgotten friend of the frugal.

What is Layaway?

Layaway… is a way to purchase an item without paying the entire cost at once. However, rather than taking the item home and then repaying the debt on a regular schedule, the layaway customer does not receive the item until it is completely paid for.  Wikipedia

Layaway started during The Great Depression because folks simply didn’t have enough cash reserves to make most purchases.  The programs stuck around for many decades before phasing out during the 1980’s.  By the 1990’s merchants began offering store credit cards, charging interest, and making a killing.  Once consumers bit, credit cards took over and most merchants viewed layaway programs as just another unnecessary cost and cut the cord.

With the advent of the 2008 financial crisis, many stores who did discontinue their layaway programs have begun jumping back on the bandwagon.  Families are actively seeking out stores that do… especially around back-to-school or holiday shopping!

Why use Layaway?

By no means is this list meant to be exhaustive, but here are a few solid reasons to reconsider this old school frugal fashion custom.

  1. Using layaway will teach you and your children the proper relationship between saving and purchasing – no money, no goodie.
  2. Using layaway trains you to use “saved money” rather than credit cards thus avoiding having to pay interest for your purchases.
  3. Using layaway will help you to ween yourself off the instant gratification boom that has plagued America for decades.
  4. Using layaway gives you more time to properly contemplate your purchase to better determine whether or not you actually need it.
  5. Using layaway helps you spend less since you have to pay for the purchase before you get to take it home.

My recent Layaway Love Story

The coat and receipt you see above are both from my own personal layaway experience… from yesterday.

November 2009 marks the adoption of The Jabs Family Envelope System. One category that never received any love before we started using cash envelopes was the clothing category.  For the last 6 months or so, my wife has very patiently foregone any clothing purchases for the betterment of our family budget; and although I appreciate her sacrifice I realize not setting aside money for clothing is not sustainable in the long run.  She works a professional job that requires nice clothes, and I am looking to simplify my wardrobe by getting rid of 80% of my existing supply and buffering/replacing it with extremely high quality, long lasting and durable replacements.  We have also lost over 60 combined pounds over the course of the last year and are both to small for a lot of our existing wardrobe.

In light of these facts we decided it was important to create and designate money to… a Clothing Envelope.

I won’t lie, it is fun to have money set aside specifically for clothing each month.  Since November is our first go at setting an amount, we went with $60 each.  Now that I have a set amount, it is one of my goals in life to get the highest quality clothing, for the best possible price.  I have been wanting a warm, durable, winter Carhartt jacket for years now but just never got around to buying one… so I decided to make it happen.  After church yesterday we stopped off at Tractor Supply Company in search of the perfect Carhartt coat.  It did not take me long to find it… but it cost more than I had in my envelope.  What should I do?

Enter Layaway…

My purchase turned out to be about $85 for the coat and a removable hood.  The coat is super high quality and can be worn in just about any cold weather situation.  It will last me for years and years, has incredible reviews, and is extremely warm and functional.

Since the store I was at offers a layaway program, I decided to take advantage.  I will use $40 from my November clothing envelope, and will purchase it next month with $45 additional from my December clothing envelope.

Which Stores Offer Layaway?

I cannot list each and every store, but here are a few who do or do not currently offer layaway:

  1. Stores that do NOT… Walmart (stopped layaway program in 2006), J.C. Penney, and Target to name a few.
  2. Stores that do… K-Mart (champion of layaway), Burlington Coat Factory, Sears, TSC, Toys R Us (for big ticket items), Best Buy (some locations), T.J. Maxx and Marshall’s (some locations.)

Will you become a layaway enthusiast?

Up until yesterday, I had not used layaway since the early 1990’s when my parents employed it to secure our school clothes… that is nearly 20 years!  Although now-a-days I usually save my money before making a purchase, I was happy to discover the layaway programs of America’s retailers were still alive and well.

What about you?  Will you be using layaway any time soon?

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1 Matt Jabs

Hey Jeff,
Close… it’s the Duck Traditional Coat – looks almost identical except the one I bought zips instead of buttons.

2 Evan


I don’t get the new found love with layaway:

Just use ING or similar bank that allows for subaccounts – let them PAY you to make your own layaway instead of paying a company.

3 Matt Jabs

Hey Evan: Yeah, I use ING savings funds for all kinds of savings goals, but for clothing we use cash envelopes. Because of this it’s easier for us to just save up the cash from our envelope for a few months and go buy it… or just use layaway.

Basically I use both, but just like to offer choices and alternatives. Some people don’t use ING and their banks do not afford them the same great conveniences as ING affords us… so layaway is another option.

Cheers man!

4 Craig

I understand your reasoning for it and it seems to be working for you. I don’t like it cause it gets you in the mentality that you can put anything on layaway. I’d rather just pay in full when I can or not buy in general. But your envelope system is working well, so keep it up.

5 Matt Jabs

It’s more about options than a single solution. Also, if someone has the mindset of buying whatever they want… layaway and nothing else will be able to help them! 🙂

6 Jason @ RedeemingRiches

Interesting take! I don’t think I’ll become an enthusiast though – I don’t get my rewards points that way!:) Ha ha!

Anyways, I think the mindset behind is good – you get the item when you pay for it. Hopefully it doesn’t take so long to pay that the clothes go out of style.

7 Matt Jabs

Ha and HA! 🙂

I stopped buying “clothes in style” years ago my man. Now I shop for clothes that are of generic style that will last me forever… like Carhartt!

Do you wear “skinny jeans?” They’re “in style.” 😉

8 Financial Samurai

Sounds like a good plan Matt! You gonna buy that jacket in your picture though? Kinda plain no?

I got so many clothes it’s annoying. Got to de-clutter and donate away!

9 Matt Jabs

Hey FS…
The simplicity and sturdy construction of this coat is exactly why I am buying it. I have a project coming up where I am going to get rid of 80% of my clothes and only keep necessities. From here forward, any purchases made will be for items of generic fashion (I could care less about being “in style” – I wasted enough time doing that in my teens & 20’s) and extremely high quality and functionality.

The 80% I get rid of will go to Goodwill as a tax write off… I do that every year, just not to this extent.

10 Andrew @ Earn Give Save

I think this is definitely a great way to go, provided that there are no penalties for changing your mind later. Also, I would probably only use layaway if I knew I was going to be getting a good deal. If it’ll be the same price next month, I’d rather keep the money in the bank (our credit union gives us 6% interest) and wait to make the purchase.

11 Matt Jabs

Hey Andrew. There are no penalties, and I see your point – but this post is written not really as an end all be all solution, but rather just another option for people. I love that layaways are making a comeback. I hold them in much higher regard than credit cards.

12 Andrew @ Earn Give Save

Matt, I totally agree. A much better alternative to paying for your holidays after they’re over! Great work on the blog—keep it up!

13 Ken

My wife and I have used layaway sparingly over the years. We won’t use it this year because it’s too close to Christmas already…I get paid once a month.

14 Mrs. White

This brought back some memories. In the late 1980’s all of us young mothers would head to the local department store and fill up our carriages with Christmas presents for our children. We did this on the major sales day. We would all budget our money for the next several weeks so we could come in and make payments. We did not get our items until they were all paid off. We would always sigh with relief and gratefulness when the day came to make that final payment and get those toys home and wrapped for our little ones.

Mrs. White

15 Matt Jabs

Awesome Mrs. White. Layaway beats using credit cards at 20% interest any day, which is what everyone has been doing since the 1980’s.

I was glad to find this program, and also happy to see the concept coming back to life this year.

Recessions are good for us, many people don’t think so, but I think they make people more resourceful and creative.

16 Mom

Way ahead of you there, my boy!! I have been using Kmart’s layaway for about the last year. There is a $5 charge for each layaway, but that is still far and away better than paying interest on a credit card. I have been doing everything strictly on a cash basis for many years, and having the layaway option makes it much easier to purchase many household items on time. Or clothing. My strategy also includes looking at the weekly ads and evaluating the advertised specials. I then shop for the things I need and usually go to Kmart, because that is the only store (besides a small Sears store that mainly specializes in all sorts of equipment) in my hometown that offers layaway, as far as I know. The temptation, of course, is to shop specials and buy just because there are sale prices offered, not because one really needs the item on sale. I try to avoid temptation by looking at the ads early in the week, then writing down the specials, thinking about it all week and asking myself on Saturday if I really need the item. I manage to avoid about 90% of impulse purchases that-a-way!

17 Matt Jabs

Oooh, I didn’t know Kmart’s layaway cost money – that’s not cool. If I went in there I would tell them that I would prefer not to pay the fee, and ask if that was possible… and if they said “no”, I would just take my business elsewhere.

Although I appreciate them keeping the program alive, I do not think they should charge a fee for it. After all, by not using a credit card for the purchase… the buyer saved them 3% in Interchange fees.

I normally get my discounts simply by asking – it’s surprising what we can get if we will just ask!

18 Steve in W MA

While I understand those who use a sinking fund and then only go shopping after they have the cash accrued, I think layaway can be a very good thing for clothes purchases because some stores run out of certain styles and sizes as the sales season goes on so you won’t necessarily be able to just buy the item in the future when you have all the money saved up. After you have gone to the effort of selecting a style and fit you don’t want to have to go through that again, and you don’t want to run into the situation where the item is simply not available for purchase anymore, either,

Having the store hold the clothes you have selected and paying on the layaway plan sounds like a good thing and avoids the extremely slippery slope of the credit card purchase.

19 Matt Jabs

Yeah, I like the idea of layaway for many reasons… and won’t hesitate to use it as long as there are no fees attached.

20 Carolina Mom

I am a HUGE fan of layaway. My kids grow out of clothes so quickly that I needed a way to manage the cost. I always put their clothes on layaway at the beginning of every season and make payments over the thirty days. A great way to save!

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