Taken literally, this quote states that spending money you do not have will put you into debt. In 1739 you could go to your local eatery, have supper, and place it on a tab that you would pay later. Doing this would give you a full stomach but place you into further debt if you did not have the resources to pay for the meal or meals that were already on the tab. Modern times have shown that credit card companies are less strict with their approvals making it very easy to buy on credit these days. Franklin’s advice is still very true today: Pay cash, and debtless you will be. That is easier said than done when you have the buying power in your hand and the desire for something burning in your stomach. Why not buy it now and pay for it in smaller quantities over time? That mentality does one thing well: it puts you into debt. Buy a $25 shirt on credit, and with interest paid overtime, you now have spent $100 for that shirt. It may have been a great buy at the time if you paid cash, but the interest is what takes over.
Nobody is saying you should “go supperless,” but beware that buying on credit will only saddle you with debt on something you could have saved up for; over time, if you should find yourself buying something on credit, plan ahead. Figure out a plan to pay the purchase off quicker. Have a credit card already? Take a look at your statement and see if you can find a small table that explains the difference between paying the minimum or a larger payment. This disclosure is now required for all credit companies, so they educate the consumer. Using this table, you can see that if you pay your minimum payment of $40 a month, it will take 11 years to pay the debt at a total of $3040. Deciding to pay $60 will reduce your time frame to 3 years and $2170, effectively saving you $870 in interest. Larger balances and more cards multiply these savings exponentially. However, using Franklin’s rule of thumb will allow you to avoid debt by taking the time to think about using credit rather than just using it.