Know when to hire tax adviser & pay off that mortgage early

QUESTION: How do I decide whether I should hire a tax preparer to do my taxes, which are on extension, or do the return on my own?

ANSWER: A good reason to hire a tax adviser/preparer is when you've had a major financial change that greatly affects your tax return/situation. For example, if you leave a job with an employer and start your own business, you'll be confronted with completing a Schedule C.

Before hiring a tax adviser to help you with new tax challenges, I suggest you do some reading. Tax advisers charge by the hour, and good ones don't come cheaply, so it will be costly to utilize them as a "tutorial on taxes."

Q: How can I save money on my large mortgage? Is it smart to pay off my mortgage early, and what are the best ways to do that?

A: Keep an eye out for declining interest rates, such as we've had of late, and watch for opportunities to refinance. The best time to refinance a mortgage is when you can lock in a lower monthly payment to recoup the costs of refinancing within a reasonable period of time (less than five years). Be sure you're going to stay with the property for at least that long.

You may also "save" money by prepaying your debt sooner than is required. You should consider doing so especially if you aren't willing or able to use your extra cash to fund investments that could provide you with a higher rate of return than the interest rate you're being charged on your mortgage.

Simply send in extra payments whenever you have extra money available, or you could just add a certain set amount to each monthly payment.

If you have a low-cost mortgage and access to good investment options, then it's not such a good idea to pay off your mortgage faster than required. For example, if a person, say in her 30s, with extra monthly cash flow has a choice between paying down her 6.5 percent mortgage vs. socking the money away into her employer's tax-deductible retirement savings plan, better to opt for the retirement plan.

Another case where paying down mortgage debt early may not make sense is if it depletes your emergency reserve and causes you to run up high-cost credit-card debt when unexpected expenses arise.