Financial experts warn about borrowing money as inflation continues

NORTH TEXAS (CBSDFW.COM) - The Federal Reserve is expected to raise interest rates tomorrow by as much as three-quarters of a percentage point, which would be the largest interest rate increase since 1994.

This comes as the inflation rates nears 9%.

"It's terrible, it's awful," said Grapevine resident Tammy Howell. "My 401k is plummeting, all my investments."

With inflation showing no signs of stalling, the Federal Reserve is set to take action.

"They're trying to slow down the economy, if they're making borrowing more expensive that's going to slow down the economy," said Certified Financial Planner at Open Air Advisers, Stewart Fields.

That means it'll be more expensive for you to take out a car loan and you'll likely have higher mortgage rates.

Fields said now is the time to come up with a plan and shares this advice if you need to borrow, "If you're looking at a loan or taking on debt, definitely shop around, interest rates move very quickly and some companies are slower to increase than others so you really need to do your homework."

Because of the rising interest rates, some financial experts have seen people borrow from their friends or family instead of the banks.

"Particularly exploding in low income communities that were already hurting so badly before and now they're having to do this for the first time and yeah it can be quite painful," said Kaben Clauson, co-founder of Pigeon Loans, a company helping people navigate loans between people who know each other.

According to the Census Bureau's latest household pulse survey of finances, over 25 million people relied on loans from someone they know.

"It's great to be able to help someone in your life, but you want to do it in a way where you don't ruin the relationship over money, that's usually a bad outcome that nobody wants," added Clauson.

Advisers also point out, if you don't need that big purchase right now, just wait.

"People are delaying expenses, people are delaying vacation or taking smaller vacations because they really don't know what's going to happen and how long this recovery will take," added Fields.