Shake, rattle and ... roll the dice without earthquake insurance?

Dear Liz: I live in Southern California and my homeowners insurance renews at the end of August. Should I consider buying earthquake insurance?

Answer: Insurance is meant to protect against catastrophic losses that we couldn’t easily pay out of pocket.

If you don’t have much equity in your home, or you’re willing to walk away from the equity you do have, then you can forgo earthquake insurance. Otherwise, you need the coverage.

The same is true for flood insurance, which is also not covered by the typical homeowners policy.

I need new wheels. What’s the best way to pay for them?

Dear Liz: Is it better to buy a car with saved money or finance the $25,000 needed? In my case I will have to sell stocks. Maybe this is a good time to do that since things look like they are taking a turn in the stock market.

Answer: Borrowing money can make sense when the asset you’re buying is likely to increase in value. For example, a mortgage could allow you to purchase a home that will appreciate over time, and a student loan could help increase your earning power.

Borrowing money makes less sense when you’re buying something that’s all but guaranteed to lose value, such as a car. Many people don’t have enough cash to pay for a reliable vehicle, of course, so financing is their best option. If you do have a choice, however, cash is best.

Selling stocks can help you raise cash, of course, but probably will incur a tax bill. Also, stocks are meant to be a long-term investment, and you really can’t time the market. Yes, your shares may decline, but they could also rise, and historically they have done so over time.

If you don’t have cash savings but do have stocks that aren’t earmarked for another cause, such as retirement, then you might consider selling enough stocks to pay for the car and the tax bill. For your next car, though, consider saving up for the purchase in a high-yield savings account.

Is one credit card better than two?

Dear Liz: I have a long-standing credit card with a national bank. As I travel a lot, I just opened a travel rewards card with the same issuer. I would prefer to keep the new card and close the old one, rather than keep two cards active with the same issuer. I understand from reading your columns this might (temporarily?) lower my credit score. Any other downside?

Answer: It’s hard to predict how an account closure will affect credit scores or how long the impact will last. The effect is likely to be greatest for people with few credit accounts and short credit histories. You may be able to mitigate some of the damage by asking that the credit limit from the old card be transferred to the new one.

Before you do that, however, consider why you’re averse to having two cards with the same issuer. The old card may have benefits the new one lacks, and could be a helpful backup if your new card is lost or compromised. The case for keeping the old card is strengthened if the annual fee is low or nonexistent. Just remember to use the old card occasionally to minimize the chances the issuer will close it for you.

Speaking of credit cards, what if a spouse has a balance when they die?

Dear Liz: When a spouse dies, is the surviving spouse responsible for outstanding credit card debt from a card issued only in the deceased’s name?

Answer: In community property states — including Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin — debts incurred during marriage are usually considered owed by both spouses, even if only one spouse’s name is on the account. In other states, debts can be considered separate, but creditors typically are paid out of the dead person’s estate before any remaining assets go to heirs.

Liz Weston, Certified Financial Planner, is a personal finance columnist. Questions may be sent to her at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact” form at asklizweston.com.