Consumer Cocaine

American's are addicted. No, they aren't addicted to drugs, but they might as well be. They are addicted to what some refer to as "consumer cocaine."

If you don't want be one of the barely surviving, collecting shopping carts at Wal-Mart in your retirement years, you need to change your financial behavior now. You must intentionally leave the 96 percent crowd that's headed for financial dependency and actively move toward the 4 percent who achieve financial independence. Obviously, the first step is to stop making new debt.

The best way to stop yourself from making new debt is to eliminate the credit cards. They are killing you financially. You have to do it. There is no way around it. It is perhaps the most emotional but crucial component to getting debt free.

I know, I can hear it now, "I don't need to cut them up! I just won't use them anymore."

Well would you:

Go on a diet but keep chocolate cake in your refrigerator?

Quit drinking but host a party and serve alcohol?

Kick a drug habit but leave a marijuana joint on your nightstand?

Stop smoking but carry a pack of cigarettes in your pocket?

In fact, I agree with John Cummuta when he calls credit cards Consumer Cocaine.

They're pushed like drugs, and people use them like drugs. If you're anywhere in the vicinity of credit worthy, your mailbox is regularly populated with credit card offers, and these offers seduce you with low-interest or even no-interest introductory periods. They are designed to give you the impression they're offering FREE Money! But these offers are no different from the schoolyard pushers who offer kids free samples to get them hooked. Credit cards are pushed like drugs.

Credit cards are frequently used like drugs to. You've had a tough week at work, and you deserve a treat, so you stop at the crack house for credit junkies (the mall). You slap down the plastic to make yourself feel good. But then when the bill comes in, you feel bad so you go back to the mall for another pick-me-up. Of course that makes the next bill go up even more, so it will take an even bigger pick-me-up to overcome the hangover from the last one, and so goes the cycle goes…just like a drug addict.

But the analogy doesn't end there. Just like with the schoolyard drug pusher, once the introductory period is over, up pops the interest rate and you're forking over more and more of your hard earned dollars to the coalition.

If you have a magnifying glass, read the fine print on the next credit card offer you receive. Look at what happens to the interest rate after the introductory period. Then look at the interest rate for cash advances. Then look at what happens to the interest rate if you're late with just one payment. Then look at some of the fees they'll charge you for using the ATM or if you make a late payment, bounce a check, or make any other possible mistake.

Yes, credit cards are consumer cocaine. They're pushed like drugs, frequently used like drugs, and they have long-term punishing effects like drugs. A drug habit cannot be “managed” and neither can a credit habit. Credit usage diminishes your financial health, so – like illegal drugs – it should be avoided not managed.

You need to learn how to eliminate credit from your life. Once you're debt-free, you'll never "need" credit again. If you want to buy a newer car, you'll just trade the one you own and pay the difference with cash. If you want to move up to a better house, you'll just sell the one you own free and clear — maybe take a little additional money out of your growing investment account — and buy your new house with cash.

Once you've paid off all your debts, you'll be able to save up in a few months an amount equal to what any credit card would likely offer you as a credit line. And it will be your money. Money you can use without any interest costs. And while it's in your accounts, it will be earning you interest. Compound interest will be working for you rather than against you. That's how it works when you eliminate debt. When you just manage debt, you stay in the 96 percent group along with all the other financial failures.

"You can likely be debt-free in just 5 to 7 years", says Cummuta. However, you must change your spending habits today. You cannot keep inuring more debt, and get debt-free.

So, ask yourself, do you want to be like the majority of Americans (a financial failure)? Or would like to be a financial success?