A little know, rarely used and sometimes confusing way to buy large items is to use a store's layaway plan. These plans have many benefits for the average consumer and is a great way of starting a good credit rating.

Most stores will have some type of layaway plan. And most stores will let you put an item into layaway without any fees. This is especially true of merchants who sell big ticket items such as appliances, furniture and electronics. The store will normally let you pay for the purchase over a substantial period of time, many times a year or more. During this time, you are not being charge any interest or fees. Of course you will not have the item you purchased until you pay off the full purchase price. But layaway lets you adjust your personal or family budget to allow for payments without the risk of default on a loan for missing a budgeted payment.

This is like saving up for the item you want to buy. Only the money has to go for the purchase and can't be used somewhere else. It is like forced savings. But the real key is to use your monthly layaway payments to get into the habit of saving. For example, if you are buying a sofa that costs $600 by paying into your layaway account at $100 per month, it will be yours and totally paid for in 6 months. But over that 6 month period you will have gotten into the habit of setting aside $100 per month so you can just keep doing that by placing $100 per month into a savings account. In other words, you will start saving $100 per month since you already know you can afford that.

Layaway plans also mean that you have fixed the price of the item you are buying. If it takes you 6 months to pay off the item, you will not have to pay a higher price if the price has actually gone up during the 6 months you were paying it off.

Layaway is better than using a credit card to buy something and then paying it off over a period of time. Credit card interest rates are so high that you could very easily pay an extra 20% of the item's cost over the time it takes you to pay off the credit card balance. By using layaway, you eliminate that extra cost. Waiting 6 months or so before you actually have your new purchase is a small price to pay in relation to the enormous credit card interest charges you will have avoided.

Finally, layaway plans are reported to credit bureaus like credit purchases in many cases. Paying off a layaway in say 6 or 12 (or more) equal monthly instalments can be a very good way of having a good credit reference added to your credit file.

So next time you see a television, sofa, refrigerator or lawn mower you want to buy, don't charge it. Put it on layaway and pay it off as quickly as your monthly saving will allow. And don't forget to keep saving the same monthly amount after you have paid for your purchase.