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In response to Federal Reserve hiking interest rates, experts say now is the time for families to budget

As interest rates climb, experts say now is the time for families to budget
As interest rates climb, experts say now is the time for families to budget 02:24

NEW YORK -- Stocks rallied Wednesday after the Federal Reserve announced an aggressive interest rate hike.

The move comes as a way to combat inflation.

CBS2's Aundrea Cline-Thomas has a look at what this means for your wallet.

READ MOREFederal Reserve raises key interest rate 0.75% as it tries to calm inflation

If you want to buy a home, car or have debt, you're going to want to pay attention. The feds raised the interest rate by three-quarters of a percent, and experts say it's time for all of us to get more serious about our budgets.

"The labor market is extremely tight and inflation is much too high," Federal Reserve Chair Jerome Powell said.

The understated delivery cannot mask the magnitude of the sharpest interest rate hike since 1994.

"We at the Fed understand the hardship that high inflation is causing. We're strongly committed to bringing inflation back down and we're moving expeditiously to do so," Powell said.

Federal Reserve raises interest rates amid fears of inflation 02:06

The move comes in an effort to put the breaks on the rising cost of everything, but it means taking out a loan and credit cards will cost you more. That's why experts say it's time to take a good look at your spending.

"If you are in a position where you've got some kind of debt you're struggling with, if it's the kind of debt that can be forbeared or deferred, like a student loan, maybe now is the time to do something like that," said Nancy Nierman, assistant director of the Education Debt Consumer Assistance Program.

Nierman is with the community service society that provides New Yorkers free financial counseling. Clients are also being advised to get serious about making a budget and sticking to it.

"What does it mean to just continue with the status quo? They're dipping into their savings to make ends meet, month by month, and they may not even be aware that they're doing it," Nierman said, "and suddenly they are going to be faced with the fact that the savings are gone."

The Federal Reserve signaled that even more interest rate hikes are looming to slow the economy until inflation that reached 8.6 percent last month levels out at 2 percent, forcing Americans to be a lot more mindful about spending.

Another rate increase is expected next month. Experts are issuing a warning about scammers trying to prey on people's desperation at this time.

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