by Dr. Charles Alonzo Peters
I grew up in the Dark Ages – no internet, no ipods, no cell phones, and definitely no credit cards.
I had heard about the Diners Club Card – but that was for really rich people. Then this thing called MasterCard came out. This too was for the well to do, the kind of people that ironically didn’t need credit. This MasterCard wasn’t like today’s pretty pieces of plastic temptation doled out to the masses. These were plain white cards with the large ugly MasterCard logo stamped right on front.
…. and again they were only for people with money.
So what did we do when we wanted something but didn’t have the money to pay for it?
LAYAWAY
Yes, as a kid I dreaded layaway. Perhaps some of you can relate. If we wanted something, and our parents finally relented to our pesky requests, we never experienced the thrill of receiving it on the spot.
No, our Tonka truck or GI Joe action figure was taken to the layaway counter at the back of the Kmart. Here it was tagged and stored in the far depths of the store. My parents would pay on it a little each week and only when it was completely paid for could we take it home.
I despised layaway. Back to school shopping in February. Christmas shopping in August – a kid’s worst nightmare.
Similarly, whenever we couldn’t get our parents to fork over the money, we’d have to save our little allowances. I’d stash my earnings under my mattress safe from my brother’s prying eyes and dutifully watch the cash grow.
Funny thing, saving either by way of the mattress or layaway, always resulted in better decisions.
The impulse nature of “get it now, pay later” was taken out of the picture. After saving my allowance for eight weeks, the cheap model car I dreamed about no longer looked so appetizing. And as my cash pile grew it became even easier to save.
Layaway forced my parents to live within their budgets – no buying stuff with money they didn’t have. No outrageous interest rates or gut wrenching credit card bills waiting in the mail.
Unfortunately, today it seems saving for things has become a lost art.
With credit cards we can have anything we want in an instant, even when we don’t have the money for it. We’ve paid the price too. By time most people finish paying off the credit card balance, the price of a single purchase has risen 10%, 25%, even 50% or more once you figure in the interest charges.
Worse yet, we’ve been turned into a nation of impulse shoppers – not really thinking – just seeing, wanting, and buying. This may explain why the average family is suffering with nearly $8,000 in credit card debt.
Ask yourself, what’s the last thing you ever saved for? The next time you’re shopping and come across that handbag, laptop, or flat screen, why not save for it instead?
You avoid getting fleeced with interest charges and often you’ll realize the item was something you couldn’t afford, didn’t really want, or never needed anyway. Old fashion idea truly, but perhaps a way to avoid suffering the modern day consequences of high debt.
Now that I think about, maybe layaway wasn’t such a bad thing afterall.
So BMWK family do you remember the days of layaway? How do you avoid the trap of “buy now pay later”? How do you keep from falling into the credit card trap? What’s the last thing you ever saved for?
Over the next few weeks you’ll get great weekly insight and tips on managing your greenbacks by Dr. Charles Alonzo Peters of MochaMoney.com so be sure to check back.