Michele Cagan

Other things that can cause your score to drop include:

• Not using any credit

• Mistakes on your credit report

• Canceling credit cards that you paid off

• Lowering credit card available credit

Even if you don’t plan to borrow money again (ever), it’s a good idea to maintain a good credit score because it can affect other things like getting a job and buying life insurance. If you do borrow again, having an excellent credit score will make you eligible for the best possible terms. You can maintain a healthy credit score without going into debt by regularly charging a small amount on a credit card, then paying the balance in full every month.

By pre-planning your big purchases, you’ll eliminate the urge to spend more than you intend. It’s very easy to overspend when you’re signing a loan agreement or swiping a credit card, but not when you have cash in hand.

Instead of making your next big purchase with credit and then making years of monthly payments, you make the payments to yourself before you buy and then pay cash for your purchase. The setup here is simple:

1. Create a SMART goal for whatever you want to buy that includes a specific dollar amount and a time frame. (I want to buy a used car for $10,000 in two years.)

2. Figure out how much you need to save monthly to meet that goal ($10,000/24 months = $417 per month).

3. Open a dedicated savings account and name it. Studies show that naming an account makes it less likely you’ll withdraw money for something else.

4. Set up automatic monthly transfers into the dedicated savings account.

At the end of your preset time frame, you’ll have the cash you need to get what you want without taking on any debt. If you have multiple goals that overlap time-wise, set a plan to pre-fund all of them so you don’t have to miss out on anything you want.

To keep debt from damaging your plans, try to pay down as much of your debt as possible, especially the big three: mortgage, student loans, and credit cards.

The most important thing you can do to keep healthcare costs from decimating your budget is to plan for them based on how much medical care you use now. Adjust your current costs for inflation (use 3 percent to 4 percent a year) to get a more accurate picture. Add in expected Medicare premiums, which run at least $1,600 per person per year. Also include extra for surprise costs, like needing a replacement crown. To help you estimate, AARP has an online retirement healthcare cost calculator (www.aarp.org).

HSA (health savings account).

No matter what caused the disaster—a market crash, medical bills, job loss—there are specific steps you can take to restore your financial security and begin moving toward prosperity. The most important step is the first one: accept your situation (without judgment) for what it is. Looking backward, assigning blame, and beating yourself up won’t change anything. Moving forward will.

There is no quick fix here, though there are some things you can do quickly to set your financial recovery in motion. The trick is to start moving forward, to take the actions required to repair the damage, and defend your financial future.