A tweet by @CNNMoney_News lead me to an article about the increasing number of consumers who are using layaway plans to pay for back to school supplies. Honestly, I didn’t even know that layaway was still a thing. In fact, my only experience with layaway is when I pass the abandoned desk at my favorite discount retailer.

Since I am in the store a lot more than I should be (another story for another day!), I had the opportunity stop by the unmanned desk yesterday to see what layaway was all about.

The first think I noticed was that it took more than ten minutes for someone to notice that I was standing there. During my time, I read the terms. In a nutshell:

-It costs $5 (plus tax) to put something on layaway
-You must put a down a deposit of $10 or 10% (whichever is more) to hold something
-You have only 30 days to pay in full
-If you don’t pay in 30 days, there is a $5 fee (plus tax)
-You can’t put sale items on layaway
-Some full price items are not eligible for layaway (at their discretion)
-You don’t get to take the item until it’s paid for
-If the item goes on sale while you’re paying, you don’t get the discount
-There is a $5 fee (plus tax) if you change your mind

Wow, with a sales pitch like that, who could resist?!

I should also mention that they accept cash, checks, and (drum roll please) CREDIT CARDS! So not only do you have the opportunity to pay fees for the privilege of holding something you can’t afford, but you can also pay interest! Sarcasm aside, I truly wonder why this payment option hasn’t been retired.

Perhaps layaway made sense when “stuff” and credit were scarcer, but we seem to have an abundance of both today. My advice is to save up your money and then go buy what you need.

Note: This is a good time for me to remind readers that my opinions on this blog do not necessarily reflect the opinions of Money Management International.

Cash for Clunkers, or the $1 billion government funded program officially named Car Allowance Rebate System (CARS), looks to be getting an extension. Congress is planning to invest an additional $2 billion into the program in the form of government stimulus rebates of up to $4,500 per clunker. The first phase of the program was wildly successful wiping out the initial $1 billion investment more than four months ahead of schedule. The success of this program will do a lot for the auto industry, but ask yourself – what will it do for your bottom line.

Buying a new, more gas efficient car, means less money for gas, but more money for monthly car payment and insurance. People who own clunkers are more than likely not locked into a car loan. Going from zero monthly payments to paying more than $300 a month on average, could make a huge impact on your family’s budget.

When shopping for a car, using the Cash for Clunkers incentive, the same fundamentals of buying still apply. The key is to do your homework:

Determine what you can afford. Review your spending plan and determine how much you can allocate each month for the car payment, gas, insurance, registration and maintenance.

Get the best deal. Shop around for the best offers. With new car sales at a 27 year low, car dealerships are offering amazing rebates and incentives. In addition to the government rebate on fuel efficient cars, you may also qualify for thousands of dollars in dealer incentives.

Consider new vs. used. Carefully weigh your options and consider the loan terms on a new car vs. a used car. According to Bankrate.com, the average used car rate is 7.5 percent and the average on a new car is 2.9 percent, which means you could save more over time on a new car.

Finally, shop around for the best rate. Credit unions and smaller finance companies may offer better loan terms than larger lenders.

What you should know about the Cash for Clunkers program:

• The purchased vehicles, which must be new (2008, 2009, 2010 models).
• The vehicle can not cost more than $45,000.
• Motorcycles are not part of the trade-in or sales process.
• Your clunker has to be in driveable condition.
• You must have a clear title to present to the dealer; no liens.
• The person on the title of the clunker has to be the same person who is buying the new car.

A new program from the Department of Education aims to make student loan repayment more manageable for people whose loan size is out of proportion with their income and family size. The Income Based Repayment (IBR) Plan reduces monthly student loan payment amounts by lengthening loan terms for people who qualify.

This program works for both old and new federal loans for any type of education; however, it is not for everyone. For example, not everyone will qualify (to see if you are eligible for the new plan, use the IBR calculator*) and it is important to understand that lengthening the loan terms could cost you more in interest over the long run. In addition, there are some types of loans, such as federal loans parents take out to pay for their child’s education, that are not eligible.

While the IBR Plan may provide welcome relief to qualifying borrowers struggling to make high monthly payments, many future students may be dismayed by the thought of paying for their education 25 years after graduation. If this is a situation you and your college-bound child would like to avoid, there is good news. Opportunities for funding your child’s education are diverse as the career paths they afford.

-Private scholarships. There are thousands of private scholarships awarded every year that fall outside of the university’s domain. Private scholarships are not limited to students with perfect grades and packed resumes. Artistic talent, creative writing skills, lineage, interest in a particular field of study or being a member of an underrepresented group can all help you secure a private scholarship. However deadlines can be as early as July, more than a full-year before the student plans to enter college.

-Section 529 plans. Section 529 plans are state-sponsored college savings programs. The two major types are Prepaid Tuition Plans, which lock in current tuition rates, and State College Savings Plans, which offer more flexible investing options. Both are useful ways for families to save for their children’s college education.

-College controlled aid. Your individual college may be able to offer a short-term installment plan that splits your tuition into equal monthly payments. Many schools also offer their own merit scholarships.

-Military Aid. The U.S. Armed Forces offer several programs to provide students with money for school. The most well known is the Montgomery G.I. Bill that provides a cash education incentive to encourage you to join and serve a tour of duty.

Finally, don’t forget to enlist the student’s help; money earned from a part-time job can cover incidentals, such as books. Keep an open line of communication with your child; unfortunately, they might not be learning about personal finance at college.

*If you’ve already accumulated student loan debt, but do not qualify for the new program, check out a previous post titled How to repay your student loans.