A Step Into The World of Investing

I've decided to start investing this year. Small amounts, monthly, put away early. I'll be placing my investments in an Islamic index fund (Indonesia). To my knowledge, there aren't any Islamic index fund in the U.S. but Islamicity.com lists Islamic mutual funds available for Muslims in the U.S. and also the IMAN Fund.

When I compare other funds to the index fund, it doesn't look attractive enough since other's are performing above the index. But, my intention is to start something bigger. I have two kids, one on the way. They're 8 and 5 years old. My hope is to implant habits for them to invest throughout their lifetime as I did not have parents that encourage me to invest early on. InshaAllah, they have many years ahead of them. Who knows what fruits it may bear in 30 years...

Evaluate, Plan, and Action

It's 2015. A new year, a perfect time to evaluate, plan, and take action.

I've kept it simple, and it works (Evaluation, Plan & Action)

Early on, I wanted to input all my transactions in an app and I figured that was the way to do things. It didn't work for me. I ended up with a simple budget with very few categories and that basically gave me an outline of things I should spend on monthly. That's all I needed. Once I budgeted and took action, it became automatic.

I paid my children first (Evaluation & Plan)

I made a promise to my children (5 & 8) that I will give $10 each month, and they can spend $20 of it once they reached $120. They reached it, spent it, and bought gold with what's left. I've set a target for them to own variants grams of gold in relation to their allowance. They own 1 gram (+/- $50), so they'll need to have 2 grams and as their allowance (in the future wage) increases, they'll have a lifetime (and habit!) to collect the 2.5, 3, 4, 5, 10, 25, 50, 100, 250, and 500 grams of gold (Indonesian Antam gold). Those gold will represent the stages in their life of having sum amount in allowances and wages.

Invest in myself  (Evaluation, Plan & Action)
I haven't been able to set aside for myself and actually, I did not setup a plan for it either. Total failure. This year, I will be applying a bit of my children's plan to myself ($10/mth), opened an account that will give me the ability to purchase mutual funds  and hopefully kickstart everything into gear. Also, one thing I'll need to start for this year is a retirement account.

Controlling wants (Evaluation & Plan)
I've failed in controlling my impulsive wants. I bought a phone and I love it. It's a Windows Lumia 535 phone. It's great for my budget and my needs, but I should have been able to hold it off a bit longer. This year, I'll try to put barriers on my spending through a 30-day list for my wants, 2 items out for 1 item in, and doing an experiences vs possessions comparison to hold off my impulses. I'll be posting some articles based on windows apps and the success/failure of barriers.

Al-Amwali (Evaluation & Plan)
I've written around the same amount of articles, I target myself to write around the same amount, look back on ideas that I've post and apply those that I haven't.

Let's get through 2015 with much improvements from 2014. InshaAllah.

Developing a Financial Game Plan

This is a post from gizmodo that I really like, provided by State Farm. It's an infographic/guide that gets us started on managing our money. It's swell.

Wanna Be Starting Something

The hardest thing to do is taking that first step. It happens almost every weekend with this blog, when I start with an empty template and not having the slightest idea on what to write about. When it comes to personal finance, budgeting may be the hardest first step. There are so many things needed to be written down that most would probably decide on doing mental accounting.

Humans may be lazy for reasons of energy preservation and by that reason, it may be most logical to break efforts into smaller ones that would be most realistically executed. In budgeting, we have to make a single effort that contribute to starting a budget. That first single effort may be writing our monthly/biweekly/weekly income on top of a piece of paper. You can then build on it on a later day or maybe become motivated to continue and finish it on the same day.

My experience is that once something is started, it builds an emotion inside, a feeling of fixation on wanting to finish it.

Managing Expectations; Personal Quarterly Earning Reports

Managing Expectations, Calvin's Way.

Life is much easier when the pressure is off your shoulders. You hear it in sport commentaries when the underdog will have a go since they don't have the must-win expectation tagged to the favorites. So, what's best when you set your budget? Under-promise. Over-deliver.

There are two personal financial statements in the quarterly personal finance report :
1. Balance Sheet which will show your net worth, whether you're increasing in wealth or becoming poorer;
2. Income Statement which is your realized monthly budget.

Companies have quarterly financial reports to release, and we should too. Our earnings announcements should be in the months of March, June, September and December where we take a picture of our financial condition for the quarter and reassess our goals. After every release comes expectation of how the company (you) position itself for the next quarter. Personal finance is pretty predictable in normal circumstances; we will get your income bi-weekly or monthly. If we set our annual goals and break it down quarterly, we should at least quarterly fulfill what is expected of ourselves. But, take a step further by outperforming on a quarterly basis in cutting our cost/expenses and constantly increasing our net worth. We should have high expectations of ourselves to perform better if things are going well economically.

Can we meet our own target performance? If we can, then it was expected. If we under-perform, investor (your) confidence lessens. If we over-deliver, it's good. Management (you) get a bonus of becoming richer due to good performance.

The awesome thing is, this can be a family event like how companies have conference calls. We can hold an earnings announcement and conference calls as a family. Children should very much know whether their parents are in debt, since debt is passed down to children.

Are you an able manager to push yourself and your family to prosperity? Of course you are, if not then who else? I guess the one expectation that you can't manage is your own. Personal finance is a must-win game.

The Chosen Few

The Chosen One - image from fanpop

I have chosen the apps (android) that I will try out for a month for my budgeting needs;

Toshl Finance, YNAB, MoneyWise, and Pocket Budget

There are two honorable mentions that I eliminated from my testing;
Goodbudget (EEBA) and simplebudget

I will start with the eliminated apps.

Simplebudget have the simplest layout. The app uses an envelope budgeting system. You work your way from determining where you want your money to go. You create envelopes for mortgage, insurance, utilities and so on. You start by making a budget for everything you need. You'll realize at the end of the process, how much income you need to support your spending (cannot be negative number).

Then, track your spending and record it in the assigned virtual envelopes that you've set early on as your budget. One problem is that it doesn't meet my needs due to the fact that I go on business trips and acquire additional income. The amount differs from month to month yet once you've set an envelope, it'll become default as you swipe across months.

Goodbudget (formerly EEBA) is similar to simplebudget, I have problems setting additional income and how it would play to my overall picture of my spending and budgeting. The graphic user interface and flow of the app requires a learning curve much deeper compared to other apps.

So, with that out of the way remains the chosen few where one will rise above all and become the budgeting app to help me reach prosperity. I will update my progress of using the apps.

Tracking Your Spending

Black Bear Tracks

And everything they did is in written records. | And every small and great [thing] is inscribed.

54. Surat Al-Qamar (The Moon); 52-53

I first opened my checking account at 19. I've vague memories of using my checkbook register. Never using it would be more truthful. Which is sad, really, because keeping record of spending plays an important role in being successful financially.

Since my last month's paycheck, I've been trying to get into the habit of jotting all my income and spending. Perfect timing too, because 2 months ago I've finally bought my first smartphone (nothing fancy, an Acer Z2 Duo) to use a budget and spending tracker app. I thought it would be easy and with the convenience of the smartphone, I'll get everything down to the last penny.

I was wrong. I'm off. By a lot.

I've narrowed my mistake to one thing: Procrastination. I kept delaying myself to take out my phone, load the app, and record the transaction. Then whatever is delayed, it never gets recorded.

So, I'm renewing my niyyah. I am committed to take record of all my transactions as they occur.

What's next? I will report on which app works best for me. I apologize that I only have an android phone, so I will try to use apps that are both on iOS and Android.

Staying Motivated

Source: Wikimedia

I've tried to create a habit where I have a 20-minute exercise everyday. It worked. For a week. It was no different with money. So, I've kind of automated myself by spending on it immediately. Spend to save and invest. My money move immediately when it comes on payday. Then, I reward myself.

I spend on things like soda, strawberry smoothie ice cream and indulge after I do something for my financial well-being. The little things I love become rewards for myself. If you've seen animal trainers giving snacks as reward for the animals after they do something, this is basically using that technique.

The final two steps is about staying motivated, moving forward, and the importance of creating a healthy habit. And so, we have finally crossed the finished line, 30 steps to a better financial future. Let's go!

Financial Team Assemble!

Financial Team Assemble! Image: Marvel Avengers

 The one thing I've learned from past experiences of working in teams is that the best team assembled are those that include diverse talents. Step 28 suggests your team should consist of a tax advisor, credit counselor, financial planner and lawyer. Kiplinger suggests a dream team of a financial planner, investment adviser, estate-planning lawyer, and an accountant. The two only showing a slight difference depending on where you are with your money, one being in debt and the other with solid finances and ready to invest.

 It all sounds good when personal finance books suggests that you should build a team as if we're all Tony Stark's with money to burn, thus often forget to mention the costs associated with it.

 Spoiler: it's not cheap.

 Now, don't take this the wrong way. I'm not trying to sell the idea to readers that they should spend their hard-earned money on professionals. I'm having a hard time to convince myself to do that actually. So, this is actually me, trying to convince myself.

 According to the article from Kiplinger, financial planners come at a cost of $200-300/hour. There are online financial planners such as LearnVest offering combined services of financial planning plus technological support that starts from $89 one time fee, plus a $19 monthly fee. If I take the "5-year planner" plan, it would be $299 + $19/month, or about $527. That's probably the cost of a "free phone" plus a year contract phone plan or maybe a gadget. So, gadget vs financial planner.

I'm going to consider my happiness on making this decision. I'll categorize this financial planning purchase as a one-time, one-year subscription experience purchase. Am I sold on it? Not yet. I think I'll focus on how I budget my first year and what I achieve.

Not Sure If I'm Going Into Debt Or Just Using My Credit Card

Philip J. Fry (Futurama) thinking.

 We all use credit cards differently. Some use it like a charge card, borrow then pay in full when is due. Some use it as a loan, borrow then pay in installments. Sometimes, we have "pain" and "reward" signals when using plastic cards. Some people feel a rewarding experience from using their credit cards. I have a "pain" signal for myself that by using an ATM card pose a security risk by having to enter a pin. A risk of my card being hacked and a whole lot of "pain" and possibility that I may not be able to get my money back. I have that signal because it'd happened to me once, my ATM was copied, hacked, and used. But for credit cards, I lack a "pain" signal and have always treated it like cash. The pain comes much later when it gets me into debt.

Step 27 takes the financial literacy approach by educating the cost of taking on debt. We need to understand the terms such as interest or APR, length of loan, finance charge, credit limit, minimum monthly payment, grace period, over the limit and late fees associated with the debt. A much more easier approach is to just avoid it completely so that we would not need to understand it at all. When we use our card, we have to know exactly whether we are falling into debt by making that swipe purchase, since credit card increase purchasing power, but not increasing our income. If we avoid it completely, we know we are not falling into debt when we are making a purchase with cash.

 An interesting part is how debt affects us not just financially, but also emotionally and physically. Are we really ready to take on a burden of back pain, migraine, anxiety and depression by getting into debt? Debt is for the financially and mentally prepared.

Or do you, [O Muhammad], ask of them a payment, so they are by debt burdened down?

52. Surat At-Tur (The Mount; 40)

I Will Always Protect You

Do you need protection? Image source: http://www.bollywoodhungama.com

We're going to cover the topic of insurance, something I only know very little about and much less so on takaful but I'll give it a try.

Insurance is transferring risks to another party who chooses to absorb the risks whilst you have obligation to pay monthly premiums to said party. For example, I am exposed to many risks when I choose to drive. Risk of getting into an accident, injuring myself, injuring others, damage to vehicles or private/public properties, and so on. You can keep going on and on about associated risks you can think of whilst driving, risks that haven't occurred but might. The risk varies from each person through many variables, such as the town the person drives in, type of driver the person insured and profile of drivers in town. With insurance, I am given the ability to transfer that risk to a company in return that I am obligated to pay $70/month.

Insurance is about uncertainties. The three uncertainties mentioned in step 26 is auto, life, and disability. Life and disability is different to auto because the risk it focuses on is the risk of losing the ability to earn income through death or health. You may have a family that wants those risks covered because they depend on your income, because once you lose your income, things quickly spiral into a big pile of mess.

We now have a problem; the problem of risks and the religious obligation to avoid insurance because it is profiting from excessive risks due to gharar (uncertainty) . You can probably think of a million risk from driving. It is financially impossible for both individual and corporation to cover them all. So, the option we have is to seek takaful companies that are financially able to cover the risks you need covered at a monthly premium you can afford. 

The last part of step 26 is redistributing your wealth once you passes. This is a big topic that needs its own post and in series. And with that, we'll close this post that underlines the importance of protection as part of financial security, for ourselves and the family we leave behind.

And let those [executors and guardians] fear [injustice] as if they [themselves] had left weak offspring behind and feared for them. So let them fear Allah and speak words of appropriate justice. 

4. Surat An-Nisā' (The Women; 9)

Would one of you like to have a garden of palm trees and grapevines underneath which rivers flow in which he has from every fruit? But he is afflicted with old age and has weak offspring, and it is hit by a whirlwind containing fire and is burned. Thus does Allah make clear to you [His] verses that you might give thought. 

2. Surat Al-Baqarah (The Cow; 266)

Just Right

Goldilocks and the Three Bears

And [they are] those who, when they spend, do so not excessively or sparingly but are ever, between that, [justly] moderate

25. Surat Al-Furqān (The Criterian; 67)

I believe that moderation is different for everyone. Take the story of Goldilocks and the Three Bears, we know that Goldilocks likes the things that are just right. For her. What's right for Goldilocks, apparently is right for the little bear. Maybe because they're the same age or height and so on. With money, we need to consider a few more things. For example, person A & B both makes $60,000/year but one lives in an expensive city and the other in a suburb with a lower cost of living. What's right for each of them will be very different.

Reducing spending in step 22 and saving money on groceries in step 23 is trying to find that sweet spot with our spending. We cut the things that we can actually live without for a while (or forever). It can be anything, we just have to pay attention to the things we spend on. With food, the main purpose of food is just to keep us alive. If we strip things down to the core of only needs, we will probably only need to fulfill our basic nutritious needs and stop eating Doritos (I can't!). We don't have to go to the extremes. Find what we really need, and budget in what your wants are, moderately.

Like Goldilocks, it's all about in finding what's just right.

It's too small, it's too big, it's just right?

The Qadr of Money

Source: Vakil.org

I am going to pile Step 18, Step 19, Step 20, and Step 21 together in one post because they are very much connected to each other. Hopefully I can tie everything together neatly here. Before we start, please watch the video below:



Steps 18-21 is all about budgeting, and budgeting is about the present to the future, not the past. Think of budgeting as a guidance in assigning each and every dollar a job, and with the guidance created, you have peace of mind of how you will live in the present and upcoming month. It's much more peaceful than spending aimlessly and hope all will be well. So, we create a predestination of where will each dollar will go to based on the things we know will come. Things called fixed, variable and periodic expenses like mortgage/rent, utilities, insurance, birthdays and so on. When the money have been predestined to certain jobs, they cannot go anywhere else, like the comic strip above. Do not let your free will create chaos on the flow of your money. Automatically impede the movement of your money once your receive your paycheck.

"..And peace will be upon he who follows the guidance." 

20. Surat Ţāhā (Ta-Ha; 47) 

And We did not create the heaven and the earth and that between them aimlessly. That is the assumption of those who disbelieve, so woe to those who disbelieve from the Fire.

38. Surat Şād (The Letter "Saad"; 27)

Indeed, all things We created with predestination.

54. Surat Al-Qamar (The Moon; 49)

Spend 'Til You Drop

Broke Monopoly

I had always been taught and told to save. Save for the things I want to buy. Save for my goals. I did exactly just that. I became proficient at saving. Once, I brought a bag of pennies to Toys R Us to buy a handheld game. You can imagine the horror that the clerk went through of counting pennies. By the time I was a young adult, I had developed a habit of saving and spending it all at once. But my spending was of useless spending and brought me to my financial demise. It is like a winning poker player who chooses to go all-in at his last hand and game, then ends up losing it all and being a loser. So, for a long time, I never saw the real lesson of spending when I always feel like a loser in the end.

And spend of your substance in the cause of Allah, and make not your own hands contribute to (your) destruction; but do good; for Allah loveth those who do good.

2. Surat Al-Baqarah (The Cow; 195)

And [they are] those who, when they spend, do so not excessively or sparingly but are ever, between that, [justly] moderate

25. Surat Al-Furqān (The Criterian; 67)

The focus should be balanced. Saving is important but, spending is equally as important. But the word that we all should be more focused on is "spend". The reason is, only through spending can we actually realize a benefit (or destruction!). Think about it. What benefit is there through saving if no spending actually occur? Even the money that WE SAVE in the bank, the BANK SPENDS for benefit. Benefit to the people working for the bank and society. It is the purpose of banks to gather money and redistribute them as loans. The bank profits, and those who borrow for purpose of business profits from income. Or if it is a car loan for example, the bank, the car dealership or person receiving the money benefits. The reminder of excessive spending is, as we all know, what happens on a bigger scale when everyone stretch themselves too thin.

Going back on the topic of step 17, saving for our goals. If you remember "The Priority Pyramid" teaches us the foundation and goals that we should build on; spending less than earned (no additional debt), consumer debt free (no credit card debt or car loans), and building an emergency fund. They are part of what Dave Ramsey calls "The Seven Baby Steps". All of these require spending, than actual saving. Now, there's nothing wrong with spending all your monthly income, if you spend it all your required expenses and the seven baby steps. Once you receive your paycheck, you automate yourself to start spending money to pay for your emergency and future expenses fund, debt, investment fund, college fund, a home, retirement fund and charity. In the end, you're left with nothing. You have spend 'til you drop. But this time, it's okay.

What benefits can you actually get from hoarding and not spending money anyway?

O you who have believed, indeed many of the scholars and the monks devour the wealth of people unjustly and avert [them] from the way of Allah . And those who hoard gold and silver and spend it not in the way of Allah - give them tidings of a painful punishment. | The Day when it will be heated in the fire of Hell and seared therewith will be their foreheads, their flanks, and their backs, [it will be said], "This is what you hoarded for yourselves, so taste what you used to hoard."

9. Surat At-Tawbah (The Repentance; 34-35)

Yikes! Okay, okay. That ayat is about embezzlement of funds, and not redistributing it. But, hopefully the importance of proper spending stands.

A Thousand Years Minus Fifty

Noah's Ark. Source: Wikipedia

And We certainly sent Noah to his people, and he remained among them a thousand years minus fifty years, and the flood seized them while they were wrongdoers.

29. Surat Al-`Ankabūt (The Spider; 14)

And construct the ship under Our observation and Our inspiration and do not address Me concerning those who have wronged; indeed, they are [to be] drowned."

11. Surat Hūd (Hud; 37)

And a sign for them is that We carried their forefathers in a laden ship.

36. Surat Yā-Sīn (Ya Sin; 41)

There are many doors to take on the way to prosperity. All containing different strategies. The truth is, any strategy will do. The often heard "spending less than earnings" (or earning more than you spend, if you prefer to spin it that way) is the foundation of all types of strategies. You can start change now, without having to go through 30 steps to financial literacy, as long as you know how to spend and accumulate wealth, you'd be perfectly fine.

The key is really in the commitment. Are you committed? If you say you will save 20% of every paycheck, are you committed to it? You will not spend more than X amount on groceries per month, are you committed?

If we go through stories of Prophets, their life requires much patience and commitment. Prophet Nuh (alayhi-salaam) goes through one of the most grueling task in building a ship that would have enough room for pairs of animals and his followers. How many hundreds of years did it took to build it, since he lived around 950 years?

Prophet Nuh (alayhi-salaam) probably prepared himself for something terrible that would occur, but he didn't know exactly when. Prophet Yusuf (alayhi-salaam) had it better with the dream interpretation of seven productive years then seven difficult. That's something you can plan. Even after the construction of the ship was finished, and all animals collected, there is probability that the flood did not occur immediately. Though, that story, any many stories of our Prophets are lessons of holding onto a commitment.

We must have the commitment to go through our plan for a prosper future, saving for a terrible unknown, because once it occurs, only our laden savings account will carry us through it.

Preparing For Retirement And The Hereafter

Conrad Hotel - Maldives Rangali Island

 When the word "retirement" is heard or read, what images pop-up in your mind? I have a cliche set of images such as the beach, a resort surrounded by beautiful landscape and water. It might have been a result of subliminal programming on my mind that we should all travel the world, hop on a cruise, and check-in to a resort during retirement. This might be because of the pain vs pleasure principle that marketers use to sell retirement products by selling the idea that by purchasing a certain retirement product, you can gain a certain pleasure and financial security or avoid poverty. Thus, we are then pushed products that may not be in accordance with the guidance of our religion.

Satan threatens you with poverty and orders you to immorality, while Allah promises you forgiveness from Him and bounty. And Allah is all-Encompassing and Knowing.

2. Surat Al-Baqarah (The Cow; 268)

Is everything before retirement then considered living in terrible pain? Remember the question that Allah poses in the Quran 31 times;

So which of the favors of your Lord would you deny?

55. Surat Ar-Raĥmān (The Beneficent; 13, 16, 18, 21, 23, 25, 28, 30, 32, 34, 36, 38, 40, 42, 45, 47, 49, 51, 53, 55, 57, 59, 61, 63, 65, 67, 69, 71, 73, 75, 77)

The image associations I have and many people have today would greatly differ to people in the past. But, every individual of past or present reach a certain age when their bodies start to weaken and sooner or later cause inability to work. So, I am curious when did the word "retirement" actually came about, and whether people in past civilizations prepared for retirement or more so toward death and the Hereafter?

But those who have feared their Lord - for them are chambers, above them chambers built high, beneath which rivers flow. [This is] the promise of Allah . Allah does not fail in [His] promise.

39. Surat Az-Zumar (The Troops;20)

Planning and action are required before retirement and akhirat. Retirement is temporary. Akhirat is eternal. The only action we need to take on both is to spend. Spend 15-20% monthly from our paycheck to put into a savings/retirement account, spend in the way of Allah, and spend wisely. Spending wisely is essential to success.

Indeed, the wasteful are brothers of the devils, and ever has Satan been to his Lord ungrateful.

17. Surat Al-'Isrā' (The Night Journey; 27)

Step 15 on retirement is such a big topic and requires extensive planning, to which you can seek from Islamic financial planners (IFP) or a certified financial planners (CFP). The only one I can find on Google is Azzad Asset Management and most IFP's are based in Malaysia. InshaAllah, there will be more posts on retirement in the future. 

The Dream About The Skinny Cow

Skinny Cow brand

[He said], "Joseph, O man of truth, explain to us about seven fat cows eaten by seven [that were] lean, and seven green spikes [of grain] and others [that were] dry - that I may return to the people; perhaps they will know [about you]." | [Joseph] said, "You will plant for seven years consecutively; and what you harvest leave in its spikes, except a little from which you will eat. | Then will come after that seven difficult [years] which will consume what you saved for them, except a little from which you will store. | Then will come after that a year in which the people will be given rain and in which they will press [olives and grapes]."

12. Surat Yusuf (46-49)

We all need an emergency savings. Just how much is often the difficult question to answer. It might be a number that helps you sleep at night. For example: If things are a mess, but you have $10,000 in the bank, you wouldn't lose any sleep about how you will pay your bills, buy food, and so on. However, different circumstances affect the monies required. So, I think Surat Yusuf provides a good guide on answering the question of how much is needed under extreme situation when a seven year drought happens.

Notice in the ayats that during the seven years of normalcy, you will have to save money, squeeze the spending and save. During the seven difficult years, you will consume from what you save and even have the ability to save from the income you receive. We can apply this to a hypothetical case on how much needed to face seven difficult years in which you will consume your savings. For example, you are unemployed but you have a temp job (which have nothing to do with your educational background, or specialty) that barely covers your lifestyle. So, every month you dip your hands in your savings for seven years, whilst also saving from income you receive at the temp job. How much do you need? In this scenario, you would have to be honest with yourself on what kind of lifestyle you would be undertaking under very difficult circumstances, the job you would be willing to take while unemployed (for seven years!), and how much that job would pay. Do it for seven years and you have your number.

A much easier way is to visit the calculator and you have your required drought savings and when you will be able to achieve the goal. That's it for step 14!

OFF TOPIC: I apologize that scheduling of articles posted are slipping a bit. I am in transition for a new job at a government institution. My job will focus on consumer education and protection in the financial industry.   So, maybe in future articles I will be tying Islamic personal finance with my findings at work.

In Every Debt That Must Be Repaid...

Image source http://www.starpulse.com/
Mary Poppins © Disney. All Rights Reserved

There once was a beautiful lady that floats down from the clouds with an umbrella to answer the call of people who are in a financial mess. She help their households by being firm and lay the ground rules for them to succeed financially. But, she doesn't forget that in all of us, their lies a child who yearns of play. She reminds us that  "in every debt that must be repaid, there is an element of fun. You find the fun, and -SNAP- repayment's a game!"

I wish such lady or at least a reality show called financial literacy nanny exists. Would it be possible to find the fun in repaying debt? Sure! In order for it to be a game, you must divert your attention from it being a burden to being an activity that is a challenge waiting to be conquered.

Let's call the game "ZERO!" The race to zero debt.

The Rules of ZERO! :

1. To win, players must have zero debt.
2. Players start with a certain amount of debt. Players must know the outstanding balance, interest rate and minimum monthly payments required.
3. Players must assign a person as witness/supporter making sure that you play the game until it's finished.

Strategy I recommend on winning the game :

• Make niyyah to win the game!
• Don't accumulate new debt.

• Repay from debt with highest interest, but put an effort into negotiating a reduction on your interest rate. You can spice up the game by assigning a number to each of your card, and your spouse or friend acting as a witness and supporter rolls the dice to see which card you get to repay first.
• Know what is required of you in terms of monthly payments.
• Stick with the plan!

Regardless whether you prefer in repaying debt with smaller outstanding balance or based on the highest interest rate, the most important thing is to stick to whatever strategy chosen to win the game. The focus should be on the necessary steps needed to be taken. Taking the thirteenth step is about the step to be free of debt, especially consumer debt. Remember, it's all a game. A game you can win.

And the worldly life is not but amusement and diversion; but the home of the Hereafter is best for those who fear Allah , so will you not reason?

6. Surat Al-'An`ām (The Cattle; 32)

Building A Foundation Of Righteousness

Image credit: wikimedia

When we read stories of Prophet Nuh, Yousuf, Musa (alayhi-salaam) and many more, we are not given a timeline of how long the events occurred. How long did it take Prophet Nuh (alayhi-salaam) to build the Ark and collect animals in pairs? How long did Prophet Yousuf (alayhi-salaam) stay in the well or imprisoned? How long did Prophet Musa (alayhi-salaam) struggle against the pharaoh?

And Fir'aun (Pharaoh) said: "O Haman! Build me a tower that I may arrive at the ways, | the ways of the heavens, and I may look upon the Ilah (God) of Musa but verily, I think him to be a liar." Thus it was made fair-seeming, in Fir'aun's eyes, the evil of his deeds, and he was hindered from the (Right) Path, and the plot of Fir'aun led to nothing but loss and destruction (for him).

40. Surat Ghāfir (The Forgiver; 36-37)

If Haman had built Pharaoh a pyramid, it may have took 10-30 years to built. That would have been a long-term goal to disprove Prophet Musa (alayhi-salaam), stop his campaign, and maintain the status of god. But, clearly Pharaoh had short-term goals to meet his long-term goal. He ordered a kill on Prophet Moses (alayhi-salaam). Short-term goals are the foundation to meet the medium-term goals and reach long-term goals and success.

Then is one who laid the foundation of his building on righteousness [with fear] from Allah and [seeking] His approval better or one who laid the foundation of his building on the edge of a bank about to collapse, so it collapsed with him into the fire of Hell? And Allah does not guide the wrongdoing people.

9. Surat At-Tawbah (The Repentance; 109)

Those before them had already plotted, but Allah came at their building from the foundations, so the roof fell upon them from above them, and the punishment came to them from where they did not perceive.

16. Surat An-Naĥl (The Bee; 26)

We all know how well the Pharaoh fared. What we can learn from the story of Pharaoh and the ayats above are; if we build a weak foundation, everything will collapse.We must act on righteousness.

When we look back at our priorities (from step 10), we should put forward those that may erode our foundation toward prosperity. Based on the Priority Pyramid, we put our focus on creating a positive cash flow, paying off of consumer debts, and freeing ourselves from riba as short-term goals.

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Step 12 discusses setting up short-term, medium-term, and long-term goals. This refers to time required to achieve the goal and they must be SMART goals. But, all goals can be broken down in shorter time fragments of achievements. A short-term goal in repaying a debt of $1200 is broken down to saving just $100 a month after receiving a paycheck. We are creating a monthly guidance and small wins  for ourselves, to move toward the big picture. Prosperity.

They are on guidance from their Lord, and it is these who will prosper (be successful).

2. Surat Al-Baqarah (The Cow; 5)

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Off-topic fun for discussion: since pyramids are tombs, and the Pharaoh thinks that he is god, it would contradict Pharaoh's goal to create public perception that he is god. Therefore, it would not have been a pyramid that Haman built. Thus, we are back at where we started with the mysteriousness of time and events.

Achieving Goals Through Habits

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Taking the next step, step 11, is to make SMART goals.

Goals need to be:
Specific: (for example) I'd like to save 20% of my monthly income
Measurable: by saving 20%, I'd have achieved the goal
Achievable: I make sure 20% of income is realistic
Rewarding: it gives a feeling of achievement or self-fulfillment
Trackable: tracking my spending on how I can improve my savings.

Before making SMART goals, more importantly, we need to know how we can make things a habit so any realistic goals made are achievable. James Clear calls it "identity-based habits". We start by planting an identity who we'd like to be, believe it, then truly become the person. For example, I create a new identity that I am a person who lives without debt whilst my current situation is being in debt with five credit cards. I must prove to myself that the new identity is who I am by creating "small wins". A person who lives without debt, surely has a savings account. So, I create a habit that after I receive a paycheck, I separate 2.5% for savings to create small wins. Raise it by 100% to 5% on next month's paycheck and so on. At the same time, I make it a habit to pay down my debt (and stop using the card), starting with the smallest outstanding balance until it is paid off. Shred the credit card. Win.

If you'd like to start with the highest interest and the highest balance, that's also fine. There are two ways to walk up a very steep and tall hill; walk with your head looking up at the highest point of the hill, or you can keep your head down. It is physically and mentally exhausting to look up and constantly saying to yourself that "you're almost there", where in truth you're still quite far. However, if you keep your head down and just keep walking, it might be a little bit easier. Don't focus on how much debt is left to be repaid, just keep focused on paying down the debt. Negotiate with the credit card company on freezing the card and interest because you've made a commitment to pay it off. You can also use services such as those provided by Islamic Debt Solutions.

The key is not in setting the goal, but in creating the healthy habits to actually become the person able to meet the goals made.