Uppity Woman: The Great Depression, Layaway and Today

Cross-posted from Uppity Woman, who writes today on her blog:

Layaway is a term that hasn’t been used for decades. This country has got to be in deep moose poop when you hear that retailers are bringing it back.

Layaway was born during the 1930s as a way to help Depression-era shoppers buy what they couldn’t afford to pay for immediately. You put a down payment on it, usually a percentage of the cost. Then you paid for the item a bit at a time over a pre-set period of time. The store usually charged a fee in addition to the price of the item. You didn’t get to take the purchase home until it was fully paid for. If you didn’t come up with the rest of the money, you no longer had purchase rights to the item and you lost the partial payments you made. Now that’s incentive to think twice before you “buy” something. Layaway was still in existence in the 60s.

Then charge cards became popular and we all know the result of that story. It’s called Today’s economic mess. As we speak, credit card companies are dramatically reducing credit limits arbitrarily, even for those who have great credit. They aren’t willing to take the risk for this folly any longer, which is kind of ironic, considering they perpetually pimped credit cards in the mail to anybody and everybody during the past decade. I don’t know about you, but I received credit “offers” every single week, and it was so pervasive, I don’t even remember when it all started. One thing is for sure: the credit card party is heading south really fast.

It’s offered at Sears, Kmart, Marshall’s and Walmart, to name a few.

We will see more of this as our economy crumbles and people are forced to think before they buy.

Here’s how it works today:

The shopper’s purchase is held by the store, sometimes for a small fee of $5 or so.

The shopper makes a minimal deposit, say 10 percent, then makes regular partial payments over a month or two until the price is paid in full.

If the shopper cancels the layaway purchase before the item is paid off, another small fee of $5 or so is charged by some stores.

Layway is a mixed blessing for the shopper.

Besides requiring the shopper to sometimes fork over a small fee, layaway denies the shopper the instant gratification of taking the item home on the spot.

Yeah well, “Instant Gratification” is how this country got into the economic mess it’s in. A little humility would go a long way to correct it. Maybe, just maybe, the lesson of living within your means and not buying what you can’t afford—until you can afford it–-is long overdue.

This is going to be rough on the I Want It Now generation. Good. There is very little wrong with learning to work for things, not to mention learning that things don’t just fall out of the sky into your lap.

I would venture to say that a return to the days when credit was something you didn’t get unless you actually were qualified is on the horizon. It will also result in far fewer bankruptcies resulting from “Instant Gratification”. Responsibility. Golly, what a novel idea….

Like the song goes, Everything Old Is New Again. Especially hard times. And you can bet they are a’comin’ when you see the word Layaway resurrected from the Graveyard of Bad Times. But when the dust dies down, perhaps America will return to the days of personal accountability, good sense, living within our means and taking responsibility for our own financial decisions.

How bad can that be?

RBO Comment: Wonder how that “redistribution of the wealth” plan is doing — and what will happen when it never appears? As John Batchelor wrote today in his post on TARP — the bill that Obama voted for (he actually showed up for this one) — the “redistribution” of that $700 billion stopped at the top. It didn’t and won’t be “redistributing” downward anytime soon. As JB pointed out, even top-of-the-line banking industry pros are looking for jobs — already.