Could Kmart's Layaway Make You Overspend?
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Could Kmart’s Layaway Make You Overspend?

Posted on Tuesday, October 6th, 2015 at 7:00 am
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KMART logoIt is only October, but Kmart already has commercials advertising their layaway. The commercials show Santa shopping at Kmart behind a woman in a Kmart shirt who is talking about their layaway program. It can be convenient to put things on layaway, just make sure that you don’t end up overspending.

Kmart layaway is not something new. The store has offered it for a very long time. The key thing to keep in mind with layaway is that it could trick you into spending more than you intended to. If you are paying attention, you can avoid that trap.

The Kmart layaway is easy to use. It allows customers to put items on hold – for a fee. Many people use it to reserve things that they want to buy as gifts for other people, but cannot afford to purchase all at once.

Bring the items you want to the layaway. Pay a $10 down payment. You will have to make a payment on those items every two weeks. You can have the items held for 8 weeks or for 12 weeks.

If you put items on hold for 8 weeks, you will have to pay a service fee of $5. If you choose to cancel your layaway you will be charged a cancellation fee of $10. Or, you can have the items held for 12 weeks. That option comes with a $10 service fee. If you cancel a 12 week layaway, you will be charged a $20 cancellation fee.

In other words, layaway is not free. You will need to spend either a total of $15 (for an 8 week hold) or $20 (for a 12 week hold). An 8 week hold requires you to make 4 payments (one every two weeks). A 12 week hold requires you to make 6 payments (one every two weeks).

It can be easy to lose track of the total amount of money you are spending just to have those items stored in layaway. Make an effort to keep track of what you spend. This will help you determine if layaway is financially worth it to you.

Try and pay your layaway deposit, service fee, and payments in cash. If you use your credit card, and cannot pay off the entire balance on the next bill, you will end up with an interest charge. That makes your layaway more expensive.

Don’t cancel your layaway. You will end up receiving a refund of your payments – minus the service and cancellation fee. You’ve now spent money to put items on hold that you didn’t end up buying. That’s a waste of money!

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Good Tip: Saving money is important – especially if you have a lot of expenses like bills to pay, loans to pay off, and all the other things that drain your bank account. Figuring out a way to save money can feel tedious to some, and like a punishment to others. U.S. News suggests that you try one of these money saving challenges. The “No Eating Out for a Month” Challenge This one is self-explanatory. The goal is to avoid eating out for an entire month. This might be super easy for people who enjoy making meals at home. People who really enjoy dining out, or ordering food to be sent to their home, may struggle with this one. It’s worth a try because spending money on take-out is more expensive than buying groceries. The Pantry Challenge This one is a variation of the “No Eating Out for a Month” challenge. The goal is to use up all of your groceries before you buy more. It forces you to try and remember why you bought a food or beverage that you don’t know what to do with, and gives you the opportunity to find a way to use it. The one exemption to this challenge is the foods that have expired. Don’t eat them! Throw them in the trash. The “No Spend” Challenge Make a goal to avoid spending money during an entire weekend. The only exemption in this challenge is that you are allowed to pay bills. This challenge is interesting because it requires creativity. You must be creative and find workarounds for problems that you would typically solve by spending money. You may have a different outlook on spending after finishing this challenge.