CHICAGO – Now that the Federal Reserve has announced plans to hike interest rates, many people are wondering how it’s going to impact their lives.

WGN News Now spoke with Troy Molitor, owner of Molitor Financial Group about the hike and what people can do to lessen the financial blow.

Molitor says the interest rate hike is an effort to slow inflation because there’s too much demand and not enough supply in the nation.

“Their effort is to increase supply of short-term lending. Your credit card, your car loan, your personal loan and by increasing that, people will start using their own cash and that will slow down the demand and open up the supply,” Molitor said.

Molitor said he doesn’t believe the rate increase will have a drastic impact on home values.

“Mortgage rates are going to go up, probably one or two more adjustments” he said. “But as far as the monthly payment goes, it could be a several hundred dollar change in your payment. It’s something you need to sit down and budget for. Prices on homes will pull back a little bit but it’s not going to cause a housing crash.”

Molitor also believes the buyer pool will shift around because people will rethink their budget which will help open inventory.

He recommends you try to pay cash for as much as you can and minimize your credit use.

“If you do need to regularly use a credit card, you’ll want to make sure that you shop around a little bit and find a credit card that works for you regarding the interest rate,” he said. “So sometimes you can talk to different lenders. Find out what cards they offer. Find something that suits your life a little bit better. … Maybe there’s a point system that they have or you can find something with a little bit lower interest rate. Sometimes you can still find zero percent interest rate on a credit card and put all your other cards on that and save yourself some interest there.”

Molitor also recommends you sit down with your significant other or a financial planner and prepare a budget, then do your best to stick to it.

He said the interest rate hike isn’t a punishment by the Feds, but an effort to make things more affordable.

“Overall, this is a move to bring things back to a better place. So, we just got to work together. Be mindful of your budget,” he said. “Decide where it is that you want to spend your money and work your way through it. Stick together with your family. Work your way through it. Everything will be fine. There is nothing to panic about.”

You can see more of Molitor’s advice in the video above.