So this is what he said (and it makes sense to me) but it is true that the question is confusing:

This is a deffered annuity question. The present value of both plan are equal. (PV = 643.67$). The arrangement that Smith want to make is that he isn't charge interest during the two months he is waiting to make the first payment. So the PV of the second plan is equal to the first one but discounted two period so = 630.99$. This is the amound he will have to invest right now at the same interest rate to have 643.67$ in two months so he is saving (643.67$ - 630.99$ = 12.68$).