Category Archives: Finance & Economics

Debt Elimination

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We’ve all heard time and again that interest and riba are categorically haraam in Islam. Maddeningly though, we often don’t hear a solution to the problem. Everybody knows these things are haraam but practical advice on how to avoid them is very hard to come by. This blog post answers a part of the question; it offers suggestions on eliminating interest-bearing debt quickly.

Pre-Requisites

1. Ask Allah to Forgive You: If you made the mistake of getting into riba (interest) debts, for whatever reason, repent and do your best to get out of it. I didn’t know better myself, and even when I found the ruling out on interest, I justified it to myself, which was wrong (college education). Stop immediately and reverse course on this.  Ask to be forgiven and formulate a new plan of action to deal with this situation.  Take your time with college and life in general – don’t let society force its ridiculous standards on you.

2. Ask Allah to Help You: We underestimate this, but remember that if you try to come closer to Allah, Allah will come closer to you faster, as was mentioned in a hadeeth qudsi. I’ll explain later how this very principle caused my wife and I to pay off all our college debts ($35,000 from me, about $8000 from her) and other lingering debts in 2 months, alhamdulillaah.

3. Financial Discipline: If you don’t have control over yourself, this system will never work. If you can’t control compulsive shopping or spending, no system will work for you. Period. If you have control issues, see a therapist, psychologist / psychiatrist, or a personal coach to help out.

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The big factor here is the DD – the bigger it is, the faster your debt gets destroyed.  I placed a modest $200, but honestly, most people living on their own can go a couple of hundred higher and make this happen much faster, and people who are living with their families can create a massive DD of about $900 – $1000 or more and can out can knock debts out very quickly.  Given the state of the economy, although I don’t normally recommend it, if you can live with your folks and work a full-time professional job, then stay with them til all debts are gone.

Read the entire post here.

Business Sense

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Farzeen on business

I continue to benefit from my father’s words to me when we spoke on the phone a few days after I arrived in Sana’a, (roughly) “Farzeen, make sure you pay for all the food and not just yours. It doesn’t matter how much it costs. Buy food and drinks for everyone. There’s baraka in it, so pay for it all.” SubhanAllah. These words were a light for me, and true to what my parents have often tried to teach me. May Allah reward them both and grant them and their loved ones peace and khayr in this world and the next, ameen.

Since my return home almost eight months ago, I’ve attended a few conferences with my sisters and “worked” at another stall – Salsabil Boutique – specializing in Muslim women’s clothing – by their side. From a combination of these experiences, cruising Sana’a marketplaces, and other insights, there are a few things that I’ve gathered about business.

First, a business starts with a sincere intention, a clear vision, and continues with a lot of hard work. Secondly, it requires a good attitude along with a rigorous preservation and practice of high moral and ethical principles. And finally, as with everything, it has to be sealed with one’s complete dependence on Allah, for success and our sustenance are both from Him alone, and we need not depend on anyone else for these matters. Within these three points are a multitude of others, but I consider these the “pillars of good business.”

Why You Should be an Honest Businessman/woman

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At Chill Yo Islam Yo

Which leads me to my new topic, yes its about business. Not monkey business, it’s actually about why we should keep our honesty when dealing with customers and especially maintain our Islamic business ethics in our every business matters. I work in a retail store, we sell overpriced clothes for no reason to beat our customers in the head. For example, we have a $1,500 coat in our store, which attracts alot of window shoppers.  Anytime I sense a customer is ready to buy it, I advise them to not get it from my store and get it from saks fifth ave or something. Where you can actually save hundreds, automatically they are stunned.

They can’t understand why an employee in the store would show them so much honesty, I’m not trying to brag about my customer service, the point is treat others how you would want to be treated. Another girl  walked in ready to buy $300 jeans, I also redirected to another store to get a better deal and again she was staring at me like an alien. Calm down, I’m a citizen. But I realized when you break the norm for the right reasons, you are looked upon as as stranger, which in reality is quite disturbing. That shows how backwards we are.

On the Credit Crunch

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Imam Suhaib Webb published an article on the Credit Crunch, and the possibility of  Islamic finance as an alternative by Andrew Booso.

Now I do not doubt that a Galbraithian approach to capitalism – as argued by Stephen Dunn in the Guardian comment pages on 15 October 2008 – would have largely averted the current disaster, by God’s will. However, I would contend that the nature of the beast dictates that the values of Galbraith will, on most occasions, be overthrown by the greed factor inherent in the essential make-up. Thus when Gordon Brown, the Prime Minister of Britain, wants to invoke for the markets the ‘values’ that it cannot generate itself, but which are values of ‘fairness, stewardship [and] cooperation’ derived from those ‘learned in families, neighbourhoods and communities and developed in the relationships we enjoy as a society’ (Telegraph online, 18 October 2008) – then we must question whether our knowledge of these factors supports the notion of capitalism now being refined for the better. Or is this just another of the endless cycles – as outlined by Dunn – that capitalism thrusts upon us from time to time, and we are simply required to bear?

Unsurprisingly, some Islamic-minded economists have set out a more just and stable method of banking within the current system. Nevertheless, the conventional banking system has largely ignored such proposals for numerous reasons, unless it means a piecemeal development of a limited number of products that allow the main actors to gain the wealth of Muslims. The nature of such a scenario means that the tail is truly only ever wagged by the dog, as dictated by the dog.

Islamic Economic SYSTEM as an alternative

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The Islamic Revival blog has a transcript of a very lucid speech going over the basics of the economic system prescribed by the Qur’an and Sunnah. The speaker briefly goes over the key principles behind the Islamic system and translates them into the practices of today.

It is important to show Islamic economics as much more then Islamic finance and Banking. What is known as Islamic banking and Islamic finance is about individuals or groups attempting to generate profits in the current system without breaking the shariah rules such as the prohibition of Riba. However today I’m going to focus on the Islamic economic system as a whole which is much wider than this and is the true alternative to the Capitalist system.

Although no Islamic state exists today, we have the economic system of Islam derived from the Quran and the Sunnah and over a thousand years of history of its implementation. Based upon this we must initiate thinking amongst the ‘left’ and the right’ and to demonstrate to them how Islam is not just a religion like the others but is a comprehensive ideology able to deal with the current crisis’s that humanity is faced with.

Read the entire speech here.

What Financial Crisis?

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The Norwich Muslims respond to the Archbishops of Canterbury and York and their tepid rap across the knuckles of the men
whose phenomenal greed is tearing down the global economy. In an overview piece on the current credit crisis wracking markets all over the world Abdassamad breaks it down and connects it to Qur’anic injunctions on financial transactions.

Read the whole piece here.

Topi tip to Abdassamad Clarke.

Islamic Finance Explained

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The Financial Times (a British daily newspaper that focuses on economics and finance) published an online presentation explaining Islamic Finance. It is a little “old” for Ijtema (March 30th, 2008) , but I found it useful after discovering it today via the Aqoul blog, and thought I’d share:

The Islamic finance industry is worth about $800bn globally and is growing at an annual rate of 10 to 15 per cent. The sector’s dramatic growth since 2000, when it was worth $150bn, and profusion of investment products has been fueled by an increasing desire by Muslims for investments that comply with Islamic law. Demand has also been triggered by the big increase in wealth in the Gulf, where growth has doubled since 2002 on the back of the soaring oil price.

Our interactive feature explores the main Islamic financial instruments, the key players and where the industry is heading.