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You and Your Purse

Advice to stay out of debt in these difficult times.

The credit crunch represents a turn in the economy where there is a reduction of funds in the banking sector that can be made available as loans. Similarly, the cost of taking a loan is very high, creating a financial void for those who need financial assistance. The credit crunch therefore forces us to rely on cash rather than credit, which in itself, hold many benefits. Unfortunately, it can be difficult for some when credit becomes sparse or unavailable. But even with cash being king, there are a few pointers that will help guide you and your family through the credit crunch, with little or no difficulty at all.




Get an Attitude Make-Over
Firstly, it is important to brace the situation with a positive attitude. A positive attitude entails believing that all is not lost, as Allah (SWT) is every Muslim’s ultimate provider. A scholar once said that: “sometimes we work extremely hard to achieve something but fail to do so because we fail to ask from Allah for aid and sustenance.” Therefore, the credit crunch is not all that bad, especially when placed in light of faith.


Always believe that money is not everything. Sure, it is many things in life, but it definitely cannot buy intangibles, including life and companionship. Once you get past worrying about the money you do not have, you will find that you are more focused on what you need to accomplish in order to live within your means or even source for alternate streams of cash.





Also remember that the best things in life really are for free, or nearly free. Many times, we can do away with branded goods or expensive services. We do not have to shop every month for clothes. There are plenty of alternatives for affordable merchandise, such as green cleaning products, instead of chemical detergents; free homeschooling resources on the internet, instead of paid curricular and there may even be ways to plant your own vegetable patch.





Just by being positive, new opportunities will arise to harness creativity that could ultimately lead to reducing financial strain.





Lastly, cash is far better than credit. Rather than taking a loan – which, by conventional terms contains riba (interest) – or any other form of credit (such as credit cards), learn that relying on cash is a far more effective method of financial survival. Credit is something we can all live without, especially in the cases when it brings more harm than benefit.



Home Management and the Inventory Check
To beat the credit crunch, you have to manage your cash. If you are able to manage your cash inflow, and subsequently, your cash outflow, you will sail past the credit crunch without a hitch.


Firstly, you have to keep track on your expenditure. Set up an accounting folder for your family’s expense and record your transactions – both your income and expenses – on a daily basis. After four to six weeks of diligent tracking, you may find that you are spending unnecessarily on certain items. They could be food, clothing or even petrol, which is quickly becoming a large portion of family income around the world.


Find a way to overcome over-spending just by cutting down on expenses. Some items, such as clothing or toys can be ruled out. Other large expenses such as petrol could be due to poor time management – like making several trips to the grocery store. These small outflows contribute to a hefty amount of cash dissipating into thin air. So keep tabs on expenditures and work with them.


Next, take a look at your home’s inventory. Sometimes excess buying leads to clogged attics, shelves, a fridge full of leftovers and overstuffed cupboards. If the fridge is overstocked and you end up throwing away vegetables, then that is a sure-sign to cut down on perishable goods. Non-perishable items such as furniture, trinkets, clothes and other pieces of home decor weigh you down from overcoming financial strain. Give away old but usable possessions to charities. Or, if you are looking forward to making some money, eBay represents a goldmine of buyers. Who knows, you may even start your own speciality shop, just by selling on eBay.


Lastly, there is always the rule of saving a portion of income when money does come in – so remember to save some money before paying bills and running to the wet market. Do not skirt around this responsibility as ultimately money will grow in Islamic saving accounts (or the instrument of your choice) and this will help you in situations worse than the credit crunch.


Find Ways to Source for Funds
Credit is essential as a ‘forward’ of cash. But there are also a number of ways to make some extra money, which will alleviate the stress of borrowing as you would not have to worry about repayment. Part-time jobs and freelancing gigs are both sources of income. Utilising skills and / or knowledge that is halal in search for rizka is very rewarding as it represents personal effort to use the resources that Allah has given us.


Other forms of cash can come from dividends – via investment from shares. Shares are an alternate form of financing as opposed to debt (i.e., loans, credit cards). Investment in shares though, is not like a loan where money is made readily available. Investors have to observe a certain term in order to enjoy the dividend. The good thing about this type of investment is that firstly, shares are perpetual, as long as the company is still in business, the money is yours – you do not ‘borrow’ it from anyone. Share investment is also halal, as long as the nature of the business is not haraam.


There are other ways to alleviate the credit crunch, especially when it comes to the need of financing. Family members are a good start as there is no interest involved when repaying funds, though it would be nice to give them a ‘gift’ when returning the money. Alternatively, seek out trustworthy Muslim co-operatives in your vicinity. Co-operatives pool funds by having their members contribute a stipulated amount every month and each member receives a month’s funds on a rotational basis. You can even start one yourself, provided you have trustworthy members and a legally binding contract.


Think of the Less Fortunate
In times of adversities, it can be difficult to feel grateful. However, remember your new attitude towards money in general and the fact that you are taking steps to survive the credit crunch is a blessing in itself. Think of the less fortunate children, sisters and brothers in the world and say a prayer for their economic security. Though money is not everything, stability is vital for survival. So lastly, to alleviate your worries, remember to donate to charity. As much as your current situation is difficult for you, there are others who live in even more pressing conditions. There is a lot of blessing in charity, so always think of the less fortunate and their struggles.





Spending and Saving the Islamic Way