With another 75-point Fed interest rate hike, we answer your top financial questions

Sticking to a budget these days feels a lot like gambling at a casino. No matter how many calculations you do or cards you try to count, you can almost be sure the house will win.

One day, gas prices are the highest they've ever been. A couple of weeks later, they're down 60 cents a gallon. Inflation continues to soar, and Americans are seeing the highest increases in costs for goods and services in 40 years. 

Now, factor in the Federal Reserve. The central bank raised interest rates by another 75 basis points on Wednesday. That’s going to make it even more expensive for Americans to pay off credit card debt, get a mortgage or secure a business loan.

Getting a headache? You're not alone. 

We've asked financial planning experts for their advice on how to power through this economic storm. 

How will it affect economy and you?:Fed increases key interest rate by 0.75 points again.

Impact of rate hikes:Why does the Fed raise interest rates? And how do those hikes slow inflation?

Will the student-loan pause be extended? Here’s how to prepare if it isn’t 

The pause, which suspended interest payments, has been extended several times since it was initiated in 2020. 

"There's a lot of chatter that it could be extended again," said Betsy Mayotte, president of the nonprofit Institute of Student Loan Advisors.

In the meantime, she recommends borrowers “pretend” to make monthly payments to a high-yield savings account where they can accrue interest that can be put toward future payments.

Also, if you can afford to make any repayments now, you “could counteract the negative financial consequence” of waiting until the pause expires on Aug. 31. 

Katie Passerotti, 42, a public high school English teacher based in Hermitage, Pennsylvania, has $100,000 remaining in student loan debt from college and graduate school.

 Some of her loans had variable interest rates. Federal student loans taken after 2006 received fixed interest rates. These borrowers aren’t affected by Fed rate increases.

Over the years, Passerotti's monthly payments have ranged from $500 to $900. On multiple occasions, she couldn’t afford to make timely monthly payments, which down the road made it harder for her to get approved for a mortgage, she told USA TODAY. 

She applied for Public Student Loan Forgiveness, and all of her loans were consolidated by the Department of Education. Passerotti hasn’t been making any loan repayments during the pause, “which has actually been one of the greatest things for me,” she said.  

She was finally able to take care of home repairs she delayed for 11 years and “worry less” about affording insulin.  

But if she isn’t approved for student loan forgiveness and has to start making loan payments come Aug. 31, she’ll have to go back to cutting corners and be especially frugal at the supermarket. 

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Which debt should you pay off first? 

To determine which loans to handle first, make a plan. 

"When we create written plans for our own situations, we're more empowered and lose that sense of hopelessness," said Cindy Zuniga, a commercial litigation attorney who paid off $215,000 of student debt and started Zero-Based Budget Coaching LLC to help others budget and save. 

With that in mind, vanquishing high-interest debt should be a priority, especially now, when interest rates seem to be moving only higher, Zuniga said. 

After you pay off high-interest debt, Zuniga recommends adding money to an emergency savings fund, or starting one.  

401(k): Is it still worth contributing?  

"If you have the ability to do so, it's important," said Mindy Yu, director of investing at Betterment at Work.

That's especially true if your employer offers 401(k) matching, because that's "like having a 100% return that is really unlikely to be experienced in a market return."

But if you don’t have enough in emergency savings – three to six months’ worth of living expenses – focus on that first, she said.

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Building those savings is even more important for Gen Z and millennials who are more vulnerable to layoffs, Yu said. If you lose your job, you should avoid dipping into your 401(k), she said. 

But if you’ve stopped contributing to your 401(k) out of fear that you’ll lose that money based on where the markets are, know that contributing “allows you to take advantage of compounded growth.” That will “give you a leg up over someone who contributes or starts saving later on in their careers.” 

Is now a good time to buy a house? 

No, said Los Angeles-based real estate investing adviser André Stewart, CEO of InvestFar, a startup.

“I think the housing market is already experiencing a correction as interest rates are astronomically high," Stewart said. "The Fed is going to have to lower rates by the beginning of next year to get us out of a recession and help stabilize the economy."

Should I consider refinancing?

Yes.

"During the pandemic, a lot of people, especially nonprime consumers, did pretty well and were able to get on top of finances a little more by spending less on vacation with not being able to go out, saving some of their stimulus checks," said Jonathan Walker, executive director of Center for the New Middle Class at Elevate, a site that helps consumers learn to build credit and explore borrowing options. 

How can I save if I just started a business?

“Small-business owners need to be more keenly tuned in for retirement savings because the small business gives them more opportunity to save than simply IRA money,” said John Shrewsbury, co-owner and financial adviser at GenWealth Financial Advisors in Arkansas. “Most of the time, owners don’t think about needing to fuel their financial independence in the future. At some point, they’ll be too old or not healthy enough to work and need retirement savings.” 

During the pandemic, entrepreneurship exploded. New-business applications jumped 24.3% from 2019, to nearly 4.4 million, a record high, according to the Census Bureau.  

For sole proprietors, Shrewsbury suggests SEP IRA contributions, which can be tax-deductible business expenses, and like other retirement funds, grow tax-deferred as investments in their personal accounts.