November 02, 2011 
TMatters 
Over the last several weeks I’ve been surprised to hear stores promoting their lay-a-way service. I have a two-fold fascination with this new marketing tactic the first being purely nostalgic. As a young girl my mother would take me shopping for fall clothes at Sears Department Store, and the clothes would be put on lay-a-way. We would go back every other week or so, and my mother would pay $20 towards her lay-a-way. Christmas gifts, birthday gifts, and lots of other purchases all went on lay-a-way at Sears and K-Mart. I can clearly remember the excitement when my mother would make that last payment, and a clerk would go into the back room and return carrying large boxes of purchases that we had been put on lay-a-way months earlier.
Over twenty years ago I read The Road Less Traveled by M. Scott Peck. I particularly remember a passage about delayed gratification. I knew then that I was the type of person that would always save the frosting on the cupcake for last. Over the years I have worked with dozens of clients weighed down with thousands upon thousands dollars of credit card debt. Lured by huge marketing campaigns geared towards promoting a buy now pay later attitude many of my clients bought into this approach only to find themselves buried under the mountain of debt this attitude results in.
In the last few years more and more clients have had 1099-C forms as part of their tax preparation. These are forms that the credit cards issue when they agree to compromise or reduce a credit card debt due to an individual’s inability to fully pay their debt. Unfortunately, when a credit card company agrees to cancel a credit card debt the amount of the debt cancelled is typically taxable. Usually, the taxpayers that have these forms had no idea that they would be paying tax on the amount of debt that the credit card companies agreed to cancel.
Approximately ten years ago I was doing presentations to students at local high schools about the pitfalls of credit card debt. Many of them were headed for colleges where credit card companies would have tables set up at orientation encouraging them to sign up for their first credit card. Ironically, a few years later I was reading articles about the alarming number of graduating college students that were filing bankruptcy due to astonishing high credit card debt. A few months ago my twenty-three year old daughter applied for and was denied a credit card. Kudos to the credit department that had the foresight to realize that a college student employed only part-time might not be the best credit risk.
For many years the credit card companies took the position that everyone should have credit cards. They calculated their risks and knew that high interest rates they charged would more than cover the number of people that filed for bankruptcy or settled their debt for a lesser amount. Times have changed and most credit card companies have tightened their criteria. Could this possibly mean a return to a time when people actually save their money and wait until they can afford something before purchasing it; a return to a period of delayed gratification? Stores like Sears and K-Mart have seen the change coming, and they know that people do not have the same credit card buying power that they did not that many years ago. Programs like lay-a-way and Christmas Clubs may become popular once again. Personally, I welcome the return to a lay-a-way lifestyle. I have already started my Christmas shopping, and I am putting it all on lay-a-way.
