Riba Closer To Home

The hour is truly near. Riba draws ever closer to home. There are businesses that lets you lend your money to other people and gain interest from it. Muslims, please stay away from Lendingclub, Prosper and others like it. Do not see it as an investment. Do you truly want to wage war against God?

Those who consume interest cannot stand [on the Day of Resurrection] except as one stands who is being beaten by Satan into insanity. That is because they say, "Trade is [just] like interest." But Allah has permitted trade and has forbidden interest. So whoever has received an admonition from his Lord and desists may have what is past, and his affair rests with Allah . But whoever returns to [dealing in interest or usury] - those are the companions of the Fire; they will abide eternally therein.| 

Allah destroys interest and gives increase for charities. And Allah does not like every sinning disbeliever.| 

Indeed, those who believe and do righteous deeds and establish prayer and give zakah will have their reward with their Lord, and there will be no fear concerning them, nor will they grieve.| 

O you who have believed, fear Allah and give up what remains [due to you] of interest, if you should be believers.| 

And if you do not, then be informed of a war [against you] from Allah and His Messenger. But if you repent, you may have your principal - [thus] you do no wrong, nor are you wronged.|  

And if someone is in hardship, then [let there be] postponement until [a time of] ease. But if you give [from your right as] charity, then it is better for you, if you only knew.| 

And fear a Day when you will be returned to Allah . Then every soul will be compensated for what it earned, and they will not be treated unjustly.

2.Surat Al-Baqarah (The Cow) 275-281

Why students should open checking and savings accounts, and how to help

Why students should open checking and savings accounts...

According to the St. Louis Federal Reserve... "Having a checking and savings account is an important first step in establishing that the consumer has the financial acumen to apply for credit for a car or home. It also permits a consumer’s payroll check to be automatically deposited into a checking account, and lets the consumer arrange to have a specified amount automatically transferred to the savings account each pay period.

But, the key advantage to consumers having bank accounts is avoiding costly alternative financial services and enabling families to build and protect their wealth. Unbanked consumers spend approximately 2.5 to 3 percent of a government benefits check and between 4 percent and 5 percent of payroll check just to cash them."

Surprisingly, fringe banking services are widely used. Using my home state as an example...
•      19.3% of Ohio households are underbanked
•      8.8% of Ohio households are unbanked

How to help...

In the spring semester of 2013, I established behavioral goals for my students. Throughout the course, I sent 3-5 nudging text messages per week using remind101 to encourage students to:
• Establish a savings goal
• Establish a savings account at a bank or credit union
• Contribute regularly to the savings account to meet that goal, ideally with a direct deposit

The results were compelling, so I approached America Saves and Budget Challenge with a proposal; broaden the practice and surveys to more students in districts across the country, use the America Saves text-messaging platform and resources to deliver the service, and pinpoint teachers to use for the experiment using Budget Challenge who are already integrating financial education technology in their classrooms.

America Saves, a campaign managed by the nonprofit Consumer Federation of America, seeks to motivate, encourage, and support low- to moderate-income households to save money, reduce debt, and build wealth. The research-based campaign uses the principles of behavioral economics and social marketing to change behavior.

Budget Challenge is a simulation seeking to teach the financial behavior, knowledge, and skill needed for young people to be Real-World Ready. They combine a ‘learning by doing’ approach with modern technology to create a positive educational experience that will foster life-long financial habits and relevant skills.

Students in the control and experimental group all received some form of formal financial education instruction in the classroom, and participated in Budget Challenge. Across the control and experimental groups, teachers represented a range of content knowledge, course delivery, and district mandates.

Teachers whose students participated in the experimental group either exhibited the grit necessary to work through the administrative obstacles presented for integrating texting into a class, or taught in districts who provided the freedom to do so. For a number of reasons, the effort of control group teachers to participate varied.

Students in the experimental group received up to 4 text messages per week for 6 weeks, were required to complete the America Saves Pledge, and encouraged in class and through text messages to…
• Establish a savings goal
• Establish a savings account at a bank or credit union
• Contribute regularly to the savings account to meet that goal, ideally with a direct deposit.

Once again, the results were strong. Students who received financial education in the control group exhibited a variance of positive behavior change toward the stated goals. However, students who received nudging messages in addition to instruction received a much greater degree of behavior change.

As my friend Dan Kadlec of TIME reported in our project...

"Other organizations including the Consumer Federation of America through its America Saves campaign are also experimenting with texted advice for young people to save or budget. A growing body of research suggests such texted tips really work, and a yet-to-be-released small-scale study out of Ohio will bolster the case. This study will show that financial education leads to positive behavior change, and that when reinforced with regular text nudges teens up their money game substantially.

In the study by Brian Page, an Ohio schoolteacher and advocate for financial education, teens taking a financial literacy course raised the rate at which they identified a savings goal, opened a savings account, and deposited money in their account. The improvement accelerated among those who also got text reminders.

For example, the percentage of students who said they have a savings goal went from 64% before a money course to 69% after. In a group that also got text messages the rate went from 79% to 94%. 'In every case, financial education led to behavior change,' Page says. 'The nudging led to even more change.' Page hopes to do a more formal study on a national level."

With all of that said, what is most effective is to have a student run credit union or bank, as is the case in schools across the country.

2 Things to Master: Discomfort and Uncertainty

When alone, we tend to think of ourselves and our consciousness rises. At some point in time, inevitably, we are tempted to ask ourselves about what could happen in the future and what we could do about it.

Sometimes we are often caught with situations when we are compelled to act accordingly without knowing what to do. And playing safe or doing nothing seems to be the best thing to do. Unfortunately, not.

Unless we break out in our comfort zone, nothing seems worthwhile. We always hear about it. And it's always true. It always takes courage and guts to do something extraordinary. There is nothing worth achieving comes easy without doing something. There is no "something for nothing".

It is my goal to reach my peak potential or at least utilize 90% of my skills and talents what God has endowed me. Else I would rut full of regrets not using my full capacity. Inefficient human being - has impeccable skills and potential yet unused. I don't want to be one.

Upon introspection, I found out a bunch of things to develop for me to reach my peak potential. On a deeper thought, I came up with a simplified goal and that there are 2 things to master: Discomfort and Uncertainty.

Individuals who outshine other people whether in business, show business or sports all have one thing in common: they are masters of handling discomfort and uncertainty.

1st Thing to Master - Discomfort

What is discomfort? It is an emotion/feeling where a person feels dull, uneasy or awkward towards a situation or a stimuli. Some of the examples are men wearing 5 inches heels, talking to strangers, fear of heights, managing people with different values, starting a business and so on. Discomfort comes either physically, emotionally, mentally or spiritually.

The reason why you need to be a master of discomfort is because all great things in life don't come easily. Thomas Edison failed more than a thousand experiments before he successfully invented the light bulb.

If one experiment lasts 2 hours, that translates to more than 2,000 hours of failed experiments. The discomfort - failure. Edison had mastered the discomfort of having failed many times. His determination and patience are great enough than failure.

Me however, managed the discomfort of being sleep-derived when I was in college. I came home 11:00 PM every night and studied until 12:00 AM for assignments and lessons. And it paid off. That laurel would have been not possible had I complained and escaped the discomfort of sleeping late and drowsy in school.

2nd Thing to Master - Uncertainty

Nobody knows the future yet we dread about it. Or is the future really important to be planned? No one should be afraid of the future. It will come, inevitably, and we just have to prepare. 

Uncertainty is the state of being unclear, vague or indefinite of what will happen or take place to an action or stimuli. In other words it means "no idea of what will happen."

One of the greatest fears, perhaps, is the fear of the unknown. It's like diving on the cliff without knowing the depth of the water. The uncertainty of what will happen cripples us to decide - to go or not to go, because we often think for the worst, not for the good. Thus, it all lies to mind conditioning. 

Why master uncertainty? Opportunities come once in a while. The fear of uncertainty causes indecision and paralysis, which leads to inaction. If humans always bind to uncertainty, there would have been no Apple, Facebook and Twitter.

To master uncertainty, we must have an optimistic mind and be bold enough to face the consequences of our decisions (and actions) whether good or bad.

A Life Without Bank Accounts (Sort Of)

A Shady Bank

I've been wondering if it's possible to live without the services that banks provide. Why you may ask? Two reasons.

And of their taking usury when they were forbidden it, and of their devouring people's wealth by false pretences, We have prepared for those of them who disbelieve a painful doom. 

 4. Surat An-Nisa (The Women); 161

First, our money is part-taking in things that may not agree to our beliefs or personal stance without our knowledge. I've heard true stories from people who work in bank's credit card unit. Stories of people who are unofficially on payroll from the banks through credit cards. The bank gives a monthly credit limit to these people that becomes like their monthly wage, charge on anything for a month, at the end of the month the card will return to zero balance.Why those people? They're influential or important people who lobby for laws, decision makers and so on. It's probably near impossible to do so in developed countries, but there may be loopholes.

O you who believe! Be afraid of Allah and give up what remains (due to you) from Riba (usury) (from now onward), if you are (really) believers. 

2. Surat Al-Baqarah (The Cow); 278

Second, Ctrl+c, Ctrl+v wikipedia, a bank is a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly by loaning or indirectly through capital markets. A bank links together customers that have capital deficits and customers with capital surpluses. That's what's a bank supposed to do and resulting of that is riba. The second reason actually goes back to the first reason as well.

Is it possible? Yes. Both sides, having a bank account and not having one, will cost you.

What's my solution? I still need a bank account since I use it for payroll, but this situation further strengthen my current money management in pulling out remaining cash on account after I do my deed of paying bills and so on.

If I had the option to become underbanked, I would probably choose a prepaid card system with the most transparent and cheapest in fees. I don't know about regulations of prepaid cards, but an article from Forbes explains that deposits on prepaid cards aren't allowed to be lent out. Citing from the article; “Banks make money by taking in deposits and lending them out at higher price. A pre-paid debit card doesn’t allow Walmart to do that.  There’s only one way for Walmart to make money off the pre-paid card and that’s the monthly fee. Meanwhile banks make money in plenty of other ways so it’s unfair to compare them.” 

May Allah help me become successful in my efforts.

Tom Fortino tells you about Finding out who is the best Financial Planner for you

Earning money, saving it, buying a house is all a big effort for you. Wouldn’t you want to ensure that your hard earned money is safe and making your life easier? This is why it is important to choose a good financial planner. It may take time and effort, but then you are talking about trusting somebody with your future plans.

What do you want? 

Before you choose a financial planner, it is essential that you decide exactly what you want.

• Do you want to focus on making your retirement secure
• Are you saving towards a new home
• Do you want to focus more on securing your kids’ education
• Do you want to plan all of the above in one big package

There are financial firms that specialize in one particular planning area, and then there are those who provide everything from planning your taxes to real estate. If you have a narrow focus, such as those mentioned above, then it is better to choose a specialized planner. General financial planning is not as efficient as optimizing one particular area.

Make sure they are professional 

To be clear, a professional is not just a person who has an office and a company name, professional financial advisors go through rigorous training in specialized subjects. They know about their area inside out. There are people who get certified in planning retirements, and others who specialize in taxes.

You can identify good professional planners by the certificates they hold. Before you choose a firm:

• Talk directly to the person who will handle your finances
• Ask for their certificates and learn about what it does
• Make sure that they have planned finances for people who have similar requirements to yours

The financial planning works has plenty of armchair experts who can keep throwing technical terms at you, but won’t be able to tell you how much you will save and earn with your investments and taxes. When it comes to serious financial planning, always stick to the professionals.

How do they benefit:

Some financial planners earn their money solely on the fee that they charge you for their services. Others also make their money by endorsing financial products from certain companies in the form of software and investment plans. In the latter case, there can be serious conflict of interest.

If a person is being paid to sell you a financial product, it is difficult to see why he or she would advise you to go anywhere else. As a result, you may end up with the decisions that are designed, not necessarily to save your money, but to serve the planner’s interests instead.

Conclusion: You choose a financial planner only once or twice over your lifetime. Take your time to research and find out about financial planning in general. Don’t jump the gun on any particular planner and select a planner who has your interests in mind and will help you achieve your financial goals.

Why We Can't Save

Blindly spending - Image from Wired.com

Based on my own experience, the one reason why I don't routinely save is because I didn't plan to save. Once I planned, I started saving though it's not a significant amount but it's still saving. Some people might feel that saving is only for people who are in a privileged position to do so, but that's very far from the truth. Everyone must save. Everyday I pass by beggars and I wonder how they they eat for the day. They save for it. And they probably budget too. They know how much they need to live for the day, and save the money they have for tomorrow.

So, if we feel like we can't save, there's probably an amount that we can save but seems too insignificant. In the end we choose not to save. Or, we actually lack the knowledge of how much we can actually save because, like I did for the past 10+ years I didn't plan to. Budgeting or planning is a duty implicitly mentioned in the Quran.

They ask you about wine and gambling. Say, "In them is great sin and [yet, some] benefit for people. But their sin is greater than their benefit." And they ask you what they should spend. Say, "The excess [beyond needs]." Thus Allah makes clear to you the verses [of revelation] that you might give thought.

2. Surat Al-Baqarah (The Cow; 219)

When people are asking how much they should spend on charity, the answer was "the excess". How much is excess? We wont know if we don't write it out on a piece of paper and break down our spending. Not planning is intentionally blindfolding yourself from your money. And if you blindfold yourself from your money, you are risking of going in circles doing what you've always done with your money. Which was not an ideal situation for me.

Three Rules to Change Your Life

Changing at all.

As my previous blog post mentioned, I've often been plagued with having multiple projects to do and no time to do them. To compound the issue further, I tend to have more dreams and no means to accomplish them. As I get older I realize the time for grand overreaching dreams, while still useful to believe, need to give way to more realistic ambitions and goals.

For many years I've been struggling to improve myself. My ultimate goal is to achieve mastery over myself. The goal is to be no longer be dictated or determined by whims but by conscious action. It's hard to imagine, for myself, such a lofty goal. But I do believe it's there.

So I created 3 criteria to help me choose the correct habits and goals that will hopefully align my life.

1. Whatever habit or goal I choose, it must be easy to follow. This means a clear, concise and consistent routine. Something I can do daily that will become habit.
2. Whatever habit or goal I choose, it must be simple to maintain and to understand. Goals can have multiple levels of complexity and so can projects, but ultimately they must be a simple progression from point A to point B.
3. Finally, the habit or goal must be minimalistic. This represents the idea that any habit or goal cannot add more complexity to my life without allowing me to be creative. Learning to program is inherently a complex undertaking, but it takes creative thinking to manipulate the code into a workable program. Mathematics is inherently a complex subject, but he takes creative thinking see the underlying patterns beneath the surface.

Ultimately these 3 criteria well me determine what is best for my life. Tonight, while I should be in bed resting, I am drafting up a blueprint that will ultimately decide my fate. Alzheimer's runs in my family along with certain forms of cancer. I have pre-hypertension in my pulse hasn't been below 70 in a couple weeks. I'll be the father of the 2nd child within a month and a half. I have many dreams and ambitions I wish to complete, but it will never be able to reach even if I cannot master myself.

Timeful: Time Management for the Stressed

Like many people I struggle with too much to do and too little time. Each day is an epic battle between my dreams and what others require or ask me to do. I am swamped and at times feel like drowning in the depths of all the chaos that dwells behind every corner and lurks behind every email or phone call. 

"Can you do this? Can you take care of that? You need to do this. This is required ASAP!"

Haven't we heard all of this from either family, friends or employers? Each day is a fight. A stress fueled day of endless chaos and struggling to get a head. 

Like many others, I tried to find salvation in my gadgets and gizmos. Omnifocus, Zippy, Reminders, Remember the Milk, GTD, Evernote, Pen and Paper list, I can continue forever with the tweaks and hacks I've tried. Yet. Nothing has worked so far. 

No system, no gimmick, no hack, no rules, nothing. The wireless network went out, which sends me rushing to patch the issue while it destroys my Pomodoro. My son has a cold and I need to monitor his temperature, which knocks out my plan.  I got sick with the same cold, now my daily habits are all gone. I know sleep 8 1/2 hours day which kills my early morning routine.

Just like everyone else, we set out with good dreams and intentions. Yet, life always has something different.

So I decided to try a new app. Timeful. It combines iOS 7 reminders and calendar together. It offers an unique feature which the app will recommend task to do that you haven't scheduled. Its focus isn't on time management but brain management to quote David Kadavy.

I just got accepted into their Beta and I am trying to see how it fits in my life.

From the start, this isn't a project management tool, but could be used with Evernote to coordinate projects. It isn't a cheap gimmick to do list, because it allow scheduling and keeping on top of your events, meetings, and to dos. 

I am looking forward to using this tool more extensively in the next few weeks and will report back the observations.

How to Invest in CD with Proper Knowledge?

The best thing about long term CD investment is that the interest rates are high. Short term strategy will attract even smaller interest rates. A Certificate of Deposit (CD) investment has always been a reserve for the wealthy but things are changing. If you are the type of investor who is future oriented, you will want your investment to earn better interest over time. CDs are good for long term investments and the risks are negligible. In order to ascertain whether or not CD is right for your investment portfolio, you need to look at two distinct factors:

• Time Horizon: As an investor, there are times you are short of cash.  With CD investments, you need to determine when you will cash out. It is recommended that you cash out when the investment has matured, otherwise you will be attracting unnecessary penalties which could be detrimental to your investment strategy.

• Interest Rates: The interest rates can be used as an indicator on just how long you are suppose to keep the money in the CD. If inflation rates are sky rocketing, it is advisable that you go for short term CD. If inflation is falling, long term CDs will be the best option since the interest rates are high.

Before you decide to invest your money in CD, you need to consider:

• Annual percentage rates (APR) - This is rate is usually pegged to the bank that you are buying the CD from. You can have a look at cd rates prophet to compare the rates.

• Annual percentage yield (APY) - This basically shows you the CD potential earnings in multiyear life considering the compounding rates.
Compounding is a mathematical computation process where the interest rates are charged based on the total earnings of a given set period. It could be monthly, quarterly or annually.

Once you have all this knowledge in mind, the next big question is on which term to choose. There are generally two terms. If you are a long term investor, you can go for long term CDs. If you depend on your CD investment, then you can opt for short term.

Having chosen the type of investment that suits you, next step is to assess the rates. This you can do by going through different banks. You can always use the internet to your advantage.

Laddering

This is a risk free strategy that enables you accesses the cash even if inflation rates are soaring high. An example is let’s said you have $30,000. By laddering, you will only be investing $10,000 of the total investable amount. It goes year by year and you will be able to cash out once one part of the investment matures.

With laddering, you do not have to worry about penalties because the system was invented for such eventualities. The interest rates are favorable since it is a long term investment which has been divided into segments. You can always have a chance of even better interest rates if you were to re-invest the profits.

Let's Talk Money

Anything For Money

 Money, good or bad, moves people. When I was young, I did not want to spend my time studying. But when there's money involved, boy did I work hard to push my grades up to Bs and As. One thing for sure though, it's a rather unsustainable motivator. It didn't build any positive habits in the process (for me at least) and a burden for parents to pay up.

 It's a relationship that I don't want to build with my kids, though my wife had promised my daughter a toy of her choice if she can read the Quran and she's almost there. I haven't offered my daughter, seven years old, anything in return for any achievement.  I want her to discover her emotions of being proud of herself and any other positive outcomes from her experiences.

 The relationship that I do want to build on, and what I think every Muslims should, is to talk about money rather bluntly with their kids depending on their level of understanding. A survey done by Visa found that families in Brazil and Mexico (38 and 42 days respectively) spends most time talking about money, Asians are best savers, young people aren't learning about money but Brazilians get an early start at the age of nine. These are very key things that as a parent should do, talk and teach about money and how to save.

“God commands you as regards your children’s (inheritance): to the male, a portion equal to that of two females; if (there are) only daughters, two or more, their share is two-thirds of the inheritance; if only one, her share is a half.  For parents, a sixth share of inheritance to each if the deceased left children; if no children, and the parents are the (only) heirs, the mother has a third; if the deceased left brothers (or sisters), the mother has a sixth.  (The distribution in all cases is) after the payment of legacies he may have bequeathed or debts.  You know not which of them, whether your parents or your children, are nearest to you in benefit; (these fixed shares) are ordained by God.  And God is Ever All-Knower, All-Wise.” 4. Surat An-Nisa (Women; 11)

 The ayat focuses mainly on the distribution of wealth. But underneath, I think highlights an importance in communication of wealth. Most people will find it appalling, offensive or taboo to talk about distribution of wealth after death while still alive, but I think it's a must. Especially since debt can be passed down. Money becomes a family affair. If you choose to take on debt, know that your family might take on it as well if you die in debt.

And, DEBT!