Remember layaway? I sure do – I remember when all the big box retailers had a layaway counter in each store. Scores of shirts, pants, toys, lawnmowers, and unassembled kitchen tables would be scattered around the counter as the layaway folks processed tickets and moved the items to storage. Remember what happened to layaway? I sure do – the big box retailers started offering “10% off your entire purchase if you open a store credit card.” A pretty smart idea for the retailers, really: no longer did they have to store items that weren’t completely sold. And – oh yeah – those little things called interest and late fees were a bit more lucrative.
Layaway grew in popularity back in the 1920s and 1930s, long before credit card applications lined the checkout counter. For a small fee, typically around $5, customers can pay for their purchase over a 30 or 60-day period, then take it home with no strings attached.
Kmart and Sears have both remained stalwart in their adherence to the longstanding layaway tradition. Since the economy slipped and sputtered some of their retail brethren are reintroducing the payment option to entice more folks through their doors.
What interests me about the resurgence of layaway is how so many folks refer to it as “old fashioned.” The idea of buying something only when you can afford it is foreign to our microwave culture. Certainly, credit cards are not going the way of the dinosaur anytime soon, but if the latest economic dip has taught us anything it’s that living outside of our means is a recipe for failure.
While I definitely prefer the use of layaway to credit cards, I would recommend trying a non-monthly expense fund. Rather than put a lawnmower or new wardrobe on layaway, try paying a portion of what you’ll need to spend into a savings account. Once you’ve saved what you need to make the purchase, head to the store and spend your cash. You’ll avoid the layaway fee and come home with your purchases right away. Want to have some fun? See if you can negotiate a discount when paying with cash upfront – you’d be amazed what bargains retailers are willing to give for a sale.
Showing posts with label saving. Show all posts
Showing posts with label saving. Show all posts
Thursday, April 16, 2009
Wednesday, April 1, 2009
The Tax Man Cometh and... Giveth?
April showers bring May flowers – so they say – which gives us something to look forward to. April also ushers in the annual deadline we all love bumping up against. It’s tax time again.
Many of us will receive tax refunds this year. I’m not a huge fan of refunds simply because I want that money in my pocket throughout the year rather than sitting in the government coffers as an interest-free loan. Please recognize that if you divide your refund by 12, that’s how much more you could’ve been bringing home each month last year. We can’t change the past, though, just the future. So what is the best use of those refunds anyway?
Given the pervasive attitude of fear in the economy right now, I imagine some are viewing their refunds as an unexpected boon – kind of like finding a $20 bill in a pants’ pocket that you completely forgot about. Fear is a terrible motivator – often times causing us to make brash decisions without a solid basis in reality. The reality is that we can’t control everything around us, but we must have a plan for what we do have authority over.
Start with a budget for your refund. Of course, you definitely need a monthly budget – where every dollar is spent with purpose before each month begins. Now we’ll create a plan specifically for the tax refund. Take a look at the Seven Financial Freedom Steps.
Do you have a beginner emergency fund? If you don’t have around $1,000 in a savings or money market account, then use your tax refund to open and fund an account like this. There’s no sense in throwing caution to the wind – unexpected expenses happen all the time, it’s called life. Money Magazine tells us that 78% of Americans will have a major negative financial event in any given ten-year period; that’s plenty of reason to be prepared. Likewise, if we’re going to get out of debt for good, we have to stop going into debt for these expenses, which aren't really "unexpected" after all.
Are you aggressively paying off your debt? After you’ve gotten your beginner emergency fund in place, go ahead and pay something off with your tax refund. Believe me, it’s going to feel really good! Use the debt snowball process: list all your debts from smallest to largest, pay minimums on everything except the smallest – throw as much at that one until it’s paid off. After that, move on to the next one and repeat until free of consumer debt.
If you’ve already dumped your consumer debt, find a creative way to give a portion of your refund to help someone else. Use the rest to top off your full emergency fund of three to six months’ expenses, invest toward retirement and your kids’ college, or pay down the principal on your house. The most important thing is to have a plan for this money; without one it’ll sprout legs and wander out the door.
To estimate your 2009 taxes, visit the IRS Withholding Calculator.
Many of us will receive tax refunds this year. I’m not a huge fan of refunds simply because I want that money in my pocket throughout the year rather than sitting in the government coffers as an interest-free loan. Please recognize that if you divide your refund by 12, that’s how much more you could’ve been bringing home each month last year. We can’t change the past, though, just the future. So what is the best use of those refunds anyway?
Given the pervasive attitude of fear in the economy right now, I imagine some are viewing their refunds as an unexpected boon – kind of like finding a $20 bill in a pants’ pocket that you completely forgot about. Fear is a terrible motivator – often times causing us to make brash decisions without a solid basis in reality. The reality is that we can’t control everything around us, but we must have a plan for what we do have authority over.
Start with a budget for your refund. Of course, you definitely need a monthly budget – where every dollar is spent with purpose before each month begins. Now we’ll create a plan specifically for the tax refund. Take a look at the Seven Financial Freedom Steps.
Do you have a beginner emergency fund? If you don’t have around $1,000 in a savings or money market account, then use your tax refund to open and fund an account like this. There’s no sense in throwing caution to the wind – unexpected expenses happen all the time, it’s called life. Money Magazine tells us that 78% of Americans will have a major negative financial event in any given ten-year period; that’s plenty of reason to be prepared. Likewise, if we’re going to get out of debt for good, we have to stop going into debt for these expenses, which aren't really "unexpected" after all.
Are you aggressively paying off your debt? After you’ve gotten your beginner emergency fund in place, go ahead and pay something off with your tax refund. Believe me, it’s going to feel really good! Use the debt snowball process: list all your debts from smallest to largest, pay minimums on everything except the smallest – throw as much at that one until it’s paid off. After that, move on to the next one and repeat until free of consumer debt.
If you’ve already dumped your consumer debt, find a creative way to give a portion of your refund to help someone else. Use the rest to top off your full emergency fund of three to six months’ expenses, invest toward retirement and your kids’ college, or pay down the principal on your house. The most important thing is to have a plan for this money; without one it’ll sprout legs and wander out the door.
To estimate your 2009 taxes, visit the IRS Withholding Calculator.
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