Many people who file for bankruptcy had no health insurance or were significantly underinsured. You can't avoid medical emergencies, but you may be able to avoid financial ruin. Call around. Many companies offer both group and individual policies. Even a stopgap policy with a large deductible can help if a medical crisis comes up. Federal law prohibits you from being denied medical insurance because of a pre-existing condition. Furthermore, if you anticipate leaving a job shortly, federal law requires that you be offered (and pay for) medical insurance through your former employer for up to 18 months after you leave. If you have trouble finding coverage on your own, contact a medical insurance broker to shop around for you.

Don't Carry Credit Card Balances

For many people, dependence on credit is what got them into financial trouble. Credit cards can feel like a painless way to spend while nothing may be further from the truth.

The average American owes several thousands of dollars on their credit cards. While only five percent of people are behind in their payments, about half carry a balance each month, incurring finance charges somewhere around 18 percent a year. You don't have to live like that.

Consider tossing all of your credit cards in a drawer (or in the garbage) and to commit to living without credit. If you insist on using credit, only charge what you can pay for and pay off your balance in full when the bill arrives. Don't charge based on future income - sometimes future income doesn't materialize or it materializes but you need the money to pay for an emergency expense.

If you want to live without credit, it's time to close those unnecessary accounts. Just cutting up your card and tossing it in the trash does not close your credit card account. The safest way to close a credit card account is by sending a certified letter, return receipt requested to the customer service department of the card issuer. Ask the card issuer to close your account and to report your account to credit bureaus as "closed by consumer."

Avoid Large Rent or House Payments

Most people have a choice in how much to spend for housing. If you are a renter and your rent is unmanageable, explore other options. Consider moving to a different neighborhood or into smaller digs, or taking in a roommate. If you live in a "renter's market," where high vacancy rates mean that landlords are desperate for new tenants or to hang onto the ones they have, ask for a rent reduction. If you're a long-time tenant with a good relationship with your landlord, he may be willing to lower your rent so that you stay and he can avoid the hassle of looking for someone new.

If you are a homeowner, or are in the market to buy, be realistic about how much you can afford. Lenders have all kinds of mortgages available both to buyers and to owners looking to refinance. Many mortgages start out low and gradually increase over time, hopefully to correspond to an increase in your income.

Don't take on something you can't handle. For example, a lender might offer you a bi-weekly mortgage, where you make a payment every other week, not once a month. The attraction is that you will pay off your mortgage faster than you would with a standard mortgage and save interest. But you are obligating yourself to make 26 payments a year, which equals 13 months of payments, not 12. As an alternative, you could take out a standard, once-a-month mortgage and add some extra money when you have it, rather than obligate yourself to make extra payments you might not have.

Similarly, if you are going through a divorce, think carefully before agreeing to keep the house. Money problems and divorce are intertwined for many couples. You will have that much more difficult a time making the payments as a single person than you did while married.

The house may have sentimental value for you, but very few people hold onto their homes for more than seven years.