Breaking Free: Financial Success

Talk given at Dawah Conference in Santa Clara, CA on 8/18/2007

Before we speak about success, it is important to speak about financial freedom; and there is no way to be financially free without getting out of debt;

Debt is not forbidden in Islam, and as we know the Prophet died owing money to a Jewish man in Medina; but it should be something used in necessity, and not as a line of credit; but it is also important to note that in today’s world, debt is haram because of the riba attached to it;

Most likely form of debt people find themselves in is credit card debt; what if I told you that there was an investment that guaranteed 15% return, 19%, 24%? How many would jump on it? If you pay off your credit card debt, that is exactly what you are doing!!!

5 Steps:

1) Start the process of getting out of debt by asking Allah for help and a sincere intention of getting out of riba

Allahumma inna a’oodho bika minal ‘ajzi wal kasl; wa a’oodho bika minal hammi wal hazan; wa a’oodho bika jubni wal bukhul, wa a’oodho bika minal galabid daini was qahrir rijaal

2) borrow from family members to pay it off
3) get another credit card with a 0% offer, and if, not, then one with lower rate
a) pay off within the time allotted, sometimes 12 mos and throw away credit card
and don’t use it
b) if you make sacrifices, you will be able to do it; “temporarily in repair to serve
you better:
4) negotiate with credit card company; they might cancel interest and even reduce principal that needs to be paid back
5) since you set out on this path with good intention, do not lose; “laa taqanatu mirrahmatillah”

Once clean of debt, then can begin on the path for success; and keep in mind that you don’t have to start off with a lot of money; as long as you start and are consistent, you will end there, insha Allah; and the way to do this is to be smart about it by using tax advantaged vehicles (accounts), whether they are Individual Retirement Accounts, Education Savings Accounts, etc. but whatever you use, remember to keep them halal because there is no point in have success, if you don’t earn it in a halal way;

Tax advantaged usually means investments in stock market and scholars have issued guidelines for what is halal and haram; it has to do with not making investments in companies whose primary business is against God’s laws and also staying away from those companies that finance there operations with riba; so you can use these guidelines to purchase your own stocks, or with small amounts of money, invest in a mutual funds

So once we as individuals begin to accumulate wealth, then our institutions can become independent and successful; but this doesn’t happened automatically; organizations have to put the infrastructure in place to do this; and slowly this is happening across the US where Muslim organizations, with vision from their leaders, are laying the foundations for this;

Now there are many components to a successful organization: programs, employees, volunteers, and I will only speak about one of these components, the financial one within, 4 steps:

1) Start early, but it is never too late; set aside even a small amount but start something; as organization gets bigger, it will be much more difficult to do something because of budgetary constraints; also when an organization starts, most are with 1 person in charge, or few that are close friends; easier to it then when organization is large

2) have realistic expectations: the money that you put away will never pay for entire budget, at least you don’t want it too cause it will mean that organization is not growing; what it can do, is to help with budgetary constraints, starting new projects, or doing things that no one wants to pay for

3) as organization begins to mature and funds begin to grow, then begin to publicize fund for donations
a) let people know about it in fundraising dinners
b) meet donors privately and talk about estate planning issues
c) donor education through seminars and special events

4) if you do the above, then the organization can eventually become an institution with a dedicated staff and volunteers to do this and raise more money
large US institutions do not accept cash in this department; only bequeaths and
willed assets;
money comes in slower, but larger amounts

finally, I wanted to address some common objections that I hear:

1) Board in organization says that money raised is a trust and can’t afford to lose it in investment or market fluctuation
Answer: leaving it in the bank will lose money because of inflation; let other masajid borrow it to pay you back when you need it; or look for now available halal vehicles to secure your money

2) The money should be absolutely pure and have not haram
Answer: stock market investments have been approved by scholars from all over the world and the guidelines are very similar; even leaving money in bank is not completely pure: bank uses money to lend with riba, even if they don’t pay you

3) Organization is too small, struggling, and has not assets:
Answer: start off small, even with $100 if you have to, but start; and sometimes you have assets that you don’t think are assets, like the land underneath the building