Ask Madison: Reader Mail Volume 2

Posted by Madison on September 30, 2008

One of my favorite parts about My Dollar Plan is getting to hear from you. Where you are at financially, what your questions are, what you are thinking about and what your goals are. I took some time out to answer reader mail before and it was fun, so here’s another round of questions and answers. If you missed it, you can read the first reader mail.


We paid off a credit card in 2006 and now the IRS is stating that we owe them $755 in taxes, how is this possible? We saved the money over a couple years, used our birthday, Christmas, and wedding money to do so. Since when is paying a credit card off become taxable? Can you tell me what we need to do to straighten this out? – Kimberly

Congratulations on paying off your debt! Unfortunately, I have a feeling I might know what happened. Is there any chance that you agreed with the credit card company to pay a reduced amount? If so, the forgiven part of the debt is taxable income. You should have received a 1099, and you will be liable for the tax. If you paid the debt in it’s entirety, it’s possible that the credit card company made a mistake. Either way, you’ll want to call your credit card company to see what they reported to the IRS and how much.


I am interested in applying for a business credit card. I noticed that you explained that you don’t have to have a business to apply. What do I put in the application under business name?

Also, I want to use it because of the 0% balance transfer. My plan is to transfer some of my private school loans and pay it entirely on the credit card until the introductory period ends. Can these credit companies issue me a check (without a fee)? Thanks in advance! – Priscilla

You are correct. Anyone can have a business credit card. When you apply, you select sole proprietor as the type and use your full name as the business name. However, there are 0% Balance Transfer Credit Cards that you can use as an individual. It might be easier to do that unless you had a specific reason you wanted to use a business card. Once the card is issued, you can call and give them your school loan number and address and they’ll send the payment directly to them.

Just to make sure, is your plan to pay off the entire loan during the introductory period? If so, this could be a great idea, if you keep very, very careful track of the due dates and expiration of the 0%. This is a very effective way to pay off your private loans without spending a lot on interest payments, but if you miss a payment, you’ll end up paying a lot more.


We are in the process of purchasing land and then building a house. I was kind of curious if knowing what you know now back then, would you have still built? Meaning, knowing that you want to spend more time with family and work less, do you feel that building the house caused a burden on you – or not anymore than staying where you were at? – Meagan

We built a custom house and we loved building. We both agreed that if we ever move again we’d like to build instead buy. You get exactly what you want, however, you do pay for that luxury. We didn’t really restrict ourselves much and spent a lot more than we planned. (Remember the sauna?)

Your monthly costs are somewhat unplanned when building because you really don’t know where the total will end up or the interest rate when it’s time to lock. If you plan to quit your job, it’s also easier to build the house while you still have a job to qualify for a mortgage and work out the cash flow if you own two houses while you build.

If I knew then what I know now: Would we have built? Yes. Would we have built the same house? No, we probably would have gone a little smaller and tried to keep a lid on the cost a bit more.

To prepare, figure out a budget that will work once you are home. Determine if you can build the house you want keeping it in your “new budget”. If you realize that you wouldn’t be able to afford the house you want on one income, I would seriously think about what is more important, the house or staying home. You can do both, but you may need to scale back on everything that you wanted in your house.


I am wondering how you divide your time so that you are able to manage all your accounts and have time to write for your blog while having 2 small children at home. I have a 3 year old and an 8 week old.

By the time the kids are in bed, my brain in fried and on the weekends I am usually doing things outside, like gardening, or running errands that didn’t happen during the week. What’s your secret!!?? – Julie

Even though I’m home now, I have specific times for certain tasks. Tuesday, Wednesday, and Thursday morning the kids are off at preschool or with their nanny. I use that time to write, run errands, and have “me” time.

Also, it’s probably crazy right now adjusting to two kids, but you’ll find that as your little one gets older, they’ll be on a a more similar schedule. My kids both go down for an afternoon nap at the same time now. That’s when I pay bills and manage my accounts once a week. My tips and tricks for Microsoft Money cuts my time way down, but the concepts should work for Quicken too. If I have problems, I just make an excel spreadsheet instead of forcing the software to do something it wasn’t built to do.

My secret is actually involving the kids with as much as possible. You can creatively involve your kids with lots of tasks. For example, we make dinner together. The older one loves to help. Sure it takes a lot longer, but it’s fun for both of us. In addition, if an idea for an article strikes, instead of running to the computer, we get out the coloring books. I jot an outline down (in crayon) while my son colors.

Also, a huge difference, is how you divide tasks with your spouse. My husband does the laundry, cleaning, and other domestic type stuff. He’s the best! And I realize that I’m a very lucky lady to have found someone so wonderful!

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