A Muslims REALISTIC guide to finance

Because pimping the system is SO much better than being pimped by the system.



Please note: Before making ANY major financial decisions please talk to your financial advisor. What's good for us, may not be the best for YOU.

Tuesday, July 03, 2007

Everything in Small Print Isn't Binding

Posted: Tuesday, July 3 at 07:00 am CT by Bob Sullivan


What is the penalty for a train or airline passenger who's late? Often $50 or more. What is the penalty for a company when a train or airplane is late? Nothing. How can that be fair? It's not. But this imbalance, and many others you can probably recite by heart, can be blamed in part on the proliferation of one-sided contractual relationships called "contracts of adhesion."

A contract of adhesion sounds like something you might catch by using the wrong public toilet or dancing too closely to someone in the wrong disco. It actually can be something even worse: small print.

Every one of us finds ourselves in contracts of adhesion every day, with virtually every consumer product we buy. Contracts of adhesion are pacts between two entities that are not equal, a David and Goliath agreement, where Goliath offers the deal on take-it-or-leave-it terms. Nothing can be negotiated, so everything can be unfair. Buying a car? You have to sign a piece of paper that says you'll never sue the dealer. Won't sign the paper? You can't buy a car. And since all auto dealers require these one-sided terms, consumers don't really have a choice -- either abdicate your right to sue, or don’t drive.


Recently, I ran into trouble precisely because I tried to avoid driving. On a trip from Washington, D.C., to New York, I was late for my train. Well, by my way of thinking, I was on time. I was at the gate at precisely 8:10 a.m. for my 8:10 a.m. train, but the gate agent would not let me board. Pointing to the clear evidence of my just-in-timeliness on the digital clock above her head -- which read 8:10 -- did me no good. So I was sent off to the ticket counter to exchange my ticket, and pay my inevitable penalty.

There, I received good news and bad news. I could board another train in just a few minutes, at 8:45! But I had to pay another $29. I quickly paid and hustled back toward the gate.

But as I walked away from the ticket counter, I saw on the departures screen this cursed line: "8:45 a.m. train -- DELAYED." I had just paid $29 extra for a ticket on a train that I was told would leave in 10 minutes. That was a lie from the moment the agent made the offer. It would be nearly an hour before my train actually pulled away from the station.

Did anyone offer to refund me that $29? You laugh. But why? If I faced a penalty for being late, why not Amtrak? The answer, of course, is in the small print.

In general, contracts in the United States are only valid when they are negotiated between two equal parties. That makes sense: Only people on equal footing can engage in fair, arm's-length negotiations.

Take-it-or-leave-it
Consumer contracts don't fit this bill, however. They are almost always take-it-or-leave-it, non-negotiated contracts. When you purchase a cell phone, you agree to never join a class-action lawsuit against the cell phone provider. When you get a credit card, you agree that the terms and conditions for that card can change at any time. If you don't agree to these things, you can't get a cell phone or a credit card. That's just how it is. Take it or leave it. It's all on those pieces of paper you sign, or somewhere on the firm's Web site, in very, very small print.

It's these kids of arrangements that are called contracts of adhesion. Standard "boilerplate" language, often laden with booby traps, is a part of life now. It's easy to see how they can become one-sided fairly quickly. After all, when consumers buy software or board a train, there is no time to discuss contract terms. And, in fact, doing so wouldn't be in anyone's interests. If contract terms were negotiated separately with each business dealing, commerce would slow to a crawl. So standard terms and conditions apply in these run-of-the-mill transactions. To prevent abuses, courts have held repeatedly that contracts of adhesion fall into a special category. Despite what you might have heard, unfair provisions inserted into such contracts are not legally enforceable -– even if you signed the piece of paper. Such provisions are given the drastic legal term "unconscionable." A judge who finds a provision of a contract of adhesion to be unconscionable will void that provision.

There is a problem, however: Absent activist government intervention, everything is legal until someone sues. Long ago, companies noticed this and began pushing the boundaries on contracts of adhesion. As long as no one drags them to court, anything goes.

Since no one will ever sue over the cost of a train ticket or a few text messages, cell phone companies and train companies find themselves in an enviable legal position. They can make up whatever one-sided terms they want. For example: If you quit your cell phone company early, you'll have to pay $200. But if your cell phone company goes out of business, or their service suddenly stinks, will someone pay you $200?

Still, consumers could always read the small print, and if they don't like cell phone rules, they should just avoid cell phones, right? Even that age-old advice to read everything isn’t good enough. For example: It's nearly impossible to buy software today without agreeing to a "shrink-wrap" contract, even though you generally can't read the contract until you get the software home and open the box. Many terms of shrink-wrap contracts are unfair. They are also very hard to stop. Kind of like a train.

As it turns out, Amtrak's refund and change policy actually isn't as Draconian as airline policies. Amtrak issues refunds pretty liberally at consumer requests, minus a 10 percent refund fee. That fee is waived if a train is two hours late or more. The refund fee is also waived when riders miss connections because of late trains. Try asking an airline for those terms.

Of course, no one really wants a refund when they are halfway through a trip to Hawaii or Europe. We all just want to get where we're going for a fair price. But why does the idea of refunds for late service sound so crazy to our American ears? Particularly when we, as consumers, must so often cough up the dough for a late fee?

Five minutes late? A refund
In Spain, the remarkable high-speed Ave train makes a promise that sounds insane to us Americans. If the train is more than 5 minutes late, passengers are entitled to a full refund. Nothing unconscionable about that contract.

Not surprisingly, refunds are rarely issued.

Not long ago, I arrived at the gate for a 3:15 p.m. Ave train from Madrid to Seville at precisely 3:15 p.m. (OK, it's a bad habit, I know.) The train was moving, just beginning to creep out of the station, but the conductor still let me jump on. In the same situation in the U.S., I fear I would have just been jumped -- for extra fees.

RED TAPE WRESTLING TIPS
Would that it were so easy to simply say, “Read everything!” What good is that if you ultimately have to sign the deal anyway? Know that unfair provisions of boilerplate contracts are not enforceable, so just because you signed it doesn’t mean you have to do it. You may have to get a lawyer involved, or your state’s attorney general's office, however. Still, simply knowing your rights might make you a little more convincing when you are discussing your problem with a customer service agent.

The most disturbing element on consumer contracts of adhesion are binding mandatory arbitration clauses that force consumers to surrender their rights to sue. For more information on those, visit GiveMeBackMyRights.com.

Saturday, March 24, 2007

Usury & Interest

In the name of God, Most Gracious, Most Merciful

Usury & Interest

http://search.freefind.com/find.html?id=4229431&pid=r&mode=ALL&n=0&query=usury

[2:275] Those who charge usury are in the same position as those controlled by the devil's influence. This is because they claim that usury is the same as commerce. However, GOD permits commerce, and prohibits usury. Thus, whoever heeds this commandment from his Lord, and refrains from usury, he may keep his past earnings, and his judgment rests with GOD. As for those who persist in usury, they incur hell, wherein they abide forever.

The Quran forbids usury, not interest. Quite a few states in USA have laws against usury. Usury is defined as excessive interest. A Dictionary defines usury as "an excessive or inordinate premium for the use of money borrowed", "extortionate interest", or "the practice of taking exorbitant or excessive interest." The Arabic language also makes distinction between interest (Fa'eda) and usury (Reba). The Quran forbids Reba or usury.

Earning interest and paying interest is perfectly acceptable, as the Quran has not prohibited interest. Interest is an essential component of the financial aspect of an individual or an organization. Individuals may need to save money in a bank, may carry a credit card for convenience, or may borrow and pay interest for an automobile or to own a house. Borrowing money and thus paying interest for business loans is an essential component for business and organizations. Thus paying interest, as long as it is not considered excessive by the standard of the day and community, to a credit card company, to a financial institution for a loan of any kind (business, car, house mortgage) is allowed and perfectly legal from a Quranic point of view. Also earning interest from a financial institution like a bank or bonds or mutual fund is also fine.

As defined above usury is excessive interest. Unlicensed or illegal moneylenders (mafia as a well known example) charge usury, excessive interest. Such unlicensed or illegal moneylenders are all over the world and can easily be accessed by a few inquiries. For those who live in USA, any individual can find out about these moneylenders by asking about them within their ethnic business community. These illegal moneylenders have entirely separate standards for making loans - they charge excessive interest (usury) and usually rely on someone's life (guarantor) as collateral. The Quran forbids in dealing with usury - borrowing money and paying usury or earning money by charging usury. The Quran specifically states that usury cannot be equated to commerce or taken as a normal business practice.

The practice of usury, unfortunately, is prevalent all over the world with individuals and business engaged in this practice.In practical terms as long as we are dealing with any state-licensed institution like a bank, Mortgage Company, Credit Card Company, etc., we are not violating any Quranic commandment as these institutions usually follow the law of the land and do not charge excessive interest. They calculate their interest rate on daily basis considering the status of the economy and the need of the society. However, if we deal with the illegal moneylenders who practice usury, we are in violation of clear Quranic commandments. This is not to say that one may not borrow or lend money to a friend or relative and even charge interest. Such transaction must be in writing as the Quran cleary commands in verse 2:282 and may involve interest, to at least pay for the cost of the loan to the lender if any, and compensate for any change in the value of the currency over the time of the loan, but should not involve usury.

[2:282] O you who believe, when you transact a loan for any period, you shall write it down. An impartial scribe shall do the writing. No scribe shall refuse to perform this service, according to GOD's teachings. He shall write, while the debtor dictates the terms. He shall observe GOD his Lord and never cheat. If the debtor is mentally incapable, or helpless, or cannot dictate, his guardian shall dictate equitably. Two men shall serve as witnesses; if not two men, then a man and two women whose testimony is acceptable to all. Thus, if one woman becomes biased, the other will remind her. It is the obligation of the witnesses to testify when called upon to do so. Do not tire of writing the details, no matter how long, including the time of repayment. This is equitable in the sight of GOD, assures better witnessing, and eliminates any doubts you may have. Business transactions that you execute on the spot need not be recorded, but have them witnessed. No scribe or witness shall be harmed on account of his services. If you harm them, it would be wickedness on your part. You shall observe GOD, and GOD will teach you. GOD is Omniscient.

A note should be made that the Quran, which spells out religious laws for our great religion, removes the shackles and burdens imposed on us by the ignorant scholars and religious leaders. Most of the "Muslim" countries have various laws against interest and have sham "interest-free banking" reflecting their ignorance of this simple Quranic truth. Unfortunately, quite a few of those who call themselves Muslims fall victims to the falsehood spread by these religious leaders.

[2:276-280] GOD condemns usury, and blesses charities. GOD dislikes every disbeliever, guilty. O you who believe, you shall observe GOD and refrain from all kinds of usury, if you are believers. If you do not, then expect a war from GOD and His messenger. But if you repent, you may keep your capitals, without inflicting injustice, or incurring injustice. If the debtor is unable to pay, wait for a better time. If you give up the loan as a charity, it would be better for you, if you only knew.

[3:130] O you who believe, you shall not take usury, compounded over and over. Observe GOD, that you may succeed.

[4:161] And for practicing usury, which was forbidden, and for consuming the people's money illicitly. We have prepared for the disbelievers among them painful retribution.

[30:39] The usury that is practiced to increase some people's wealth, does not gain anything at GOD. But if you give to charity, seeking GOD's pleasure, these are the ones who receive their reward manifold.

[7:157] "(4) follow the messenger, the gentile prophet (Muhammad), whom they find written in their Torah and Gospel. He exhorts them to be righteous, enjoins them from evil, allows for them all good food, and prohibits that which is bad, and unloads the burdens and the shackles imposed upon them. Those who believe in him, respect him, support him, and follow the light that came with him are the successful ones."

Friday, October 20, 2006

Rules of Giving Zakaat (ALMS)

1) Zakaat is obligatory on the free, adult sane Muslim when:
• He possesses the nisab with complete possession.
• A lunar year has passed over it.

2) Zakaat is not obligatory on the following:
• A child, nor an insane person, nor a mukatib.
• Anyone who has a due debt encompassing his money. But, if his money is more than the debt, he pays zakaat on the excess if it reaches nisab.

3) If one advance-pay the zakaat before the year has passed over it, and he possesses nisab, it is valid.

4) If wealth is destroyed after the obligation of zakaat has become due, it is waived.

5) Zakaat is due on the following:
• Gold
• Silver
• Cash
• Trade-goods
• freely-grazing livestock kept for milk, breeding or fattening: camels, cows, sheep and goats.
• Produce (excluding firewood, reeds and grass)
• Buried treasures and metals

6) Zakaat is not due on the following:
• Residential homes• Body clothes
• Household furniture
• Riding-animals
• Slaves in service
• Weapons of use

7) Zakaat is only valid if offered with an intention coinciding with the payment, or coinciding with the setting-aside of the obligatory portion.

Zakaat on Silver
1) There is no charity obligatory on any silver less than 200 dirhams (200 dirhams corresponds to19.69 troy oz and 612.36g).
2) Then, if it is 200 dirhams, and a lunar year passes over it, 5 dirhams are due for it.
3) There is nothing due on the excess until it reaches 40 dirhams, and then 1 dirham is due for it.
4) Similarly for every 40 dirhams, there is 1 dirham due.

Zakaat on Gold
1) There is no zakaat obligatory on any gold less than 20 mithqal (20 mithqal corresponds to
2. 81 troy oz and 87.48g).

2) Then, if it is 20 mithqal, and a lunar year passes over it, then half a mithqal is due for it.
3) Then, for every 4 mithqal, 2 qirat are due. There is no charity obligatory on any gold less than 4 mithqal according to Abu Hanifa.
4) There is zakaat due on raw gold and silver, as well as on jewellery and vessels made of them.

Zakaat on Goods
1) Zakaat is obligatory on trade goods, whatever they may be, if their value reaches the nisab of gold or silver; one assesses it based on whichever of the two is more beneficial for the poor and destitute.
2) If the nisab is complete at the two ends of the lunar year, then its dropping in between that does not waive the zakaat.
3) The value of goods is added to gold and silver. Similarly, gold is added to silver in value in order to reach the nisab, according to Abu Hanifa.

CATEGORIES OF ZAKAAT RECIPIENTS
Those Who May Receive Zakaat: Allah, the Exalted, says, (which means), “Alms are only for the poor, the destitute, those who collect them, those whose hearts are to be reconciled, for [mukatib] slaves, debtors, and in the Path of Allah, and the wayfarer. It’s an [ordained] obligation from Allah. And Allah is all Knowing, and Wise” [Qur’an, 9:60].These, then, are eight categories:
1) The Poor: the one who has the least of things.
2) The Destitute: the one who has nothing.
3) Al-Mu’allafa Quloobuhum: those who are still not sure of Islam yet and this money is given to them to soften their hearts towards Islam and muslims.
4) The [Zakaat] Worker: is paid by the imam in proportion to his work, if he worked.
5) Slaves: the mukatibun are assisted in freeing themselves.
6) The Debtor: the one on whom a debt is incumbent.
7) In the Path of Allah: are the stranded fighters.
8) The Wayfarer: the one who has money in his homeland, but is in a place in which he has nothing. One may divide the Zakaat to each category, or he may restrict himself to one.

Causes Not Eligible for Receipt of Zakaat:
1) It is not permissible for one to give zakaat to a dhimmi. ( don't know the logic to this statement yet, so if anyone else knows; then please tell me)
2) Nor may a mosque be built with it.
3) Nor may a dead person be shrouded with it.
4) Nor may a slave be bought with it to free.
5) Nor may it be paid to a rich person.
6) Nor may it be paid to a Sayyid's (Hussainy's) & Shareef's (Hassani's) (descendants of the Prophet, sallallahu alahi wa aalihi).

Relationships Making One Ineligible to Receive Zakaat:
1) Nor the payer of zakaat pay it to his father, or his grandfather even if higher up in ascendancy.
2) Nor to his child, nor his child’s child, even if lower down in descendancy.
3) Nor to his wife. A woman may not pay her zakaat to her husband, according to Abu Hanifa. Abu Yusuf and Muhammad said: she may pay it to him.
4) One may not pay one’s zakaat to he one’s mukatib or slave, nor to the slave of a wealthy person, nor to the child of a wealthy person if he is a minor.
5) It may not be paid to Banu Hashim, and they are: the Household of `Ali, the Household of `Abbas, the Household of Ja`far, the Household of Harith ibn `Abd al-Muttalib; nor to their freed slaves.

NOTE: In Sahih Al-Bukhari Hadith #1420 and #2907 and in Sahih Al-Muslim Hadith #1069. It is reported that Sayyiduna Hasan bin Ali once took a date from the dates of sadaqah and placed it in his mouth. At this Rasulullah sallallahu alahi wa aalihi said: "Kakh!Kakh! Spit it out! Don’t you know that we do not eat of charity?"Miscellaneous Regulations:Abu Hanifa and Muhammad said: If one pays zakaat to a man whom one thinks to be poor, and then it transpires that he is rich, or Hashimi, or an unbeliever, or if one paid it in darkness to a poor person, and then it transpired that he was his father or his son, then repeating it is not obligatory on him.Abu Yusuf said: Repetition is obligatory on him. If one paid it to a person, and then he learned that he is his slave or mukatib, it is not valid according to the verdict of them all. It is not permissible to pay zakaat to anyone who possesses the nisab of whatever type of wealth it may be. It is permissible to pay it to anyone who possesses less than that, even if he is healthy and earning. It is disliked to transfer zakaat from one land to another; rather the Zakaat of each people should be distributed amongst them, unless a person transfers it to his relatives, or to a people who are more in need than the people of his land.SADAQAT-AL FITR

1) Sadaqat al-Fitr is wajeb on the free Muslim, if he is in possession of the quantity of nisab in excess of his dwelling, clothing, furnishings, horse, weapons and service slaves.

2) He gives it out on behalf of himself, his minor children and his slaves.
• He does not pay it on behalf of his wife, nor his adult children, even if they are in his household.
• He does not give it out on behalf of his mukatib, nor his slaves who were acquired for trade.
• There is no fitrah due on either of the two masters of a slave co-owned between two partners.
• A Muslim master pays the fitrah on behalf of his unbelieving slave.

3) The obligation of the fitrah is attached to the rise of the dawn on the Day of Eid al- Fitr. So, whoever dies before that, his fitrah has not become wajeb. Whoever accepts Islam, or is born, after the rise of the dawn, his fitrah has not become wajeb. PaymentThe fitrah is as follows:1) half a sa` of wheat, or2) one sa` of dried dates or raisins or barley. The sa` according to Abu Hanifa and Muhammad is 8 Iraqi ratl. Abu Yusuf said: it is 51/3 ratl (1 sa` is a volume of 2.03 litres, and corresponds to approximately 3,149.28g. 1 sa` ~ 4 mudd; 1 mudd ~ 2 ratl; 1 ratl ~ 20 istar; 1 istar ~ 4½ mithqal {Radd al-Muhtar}). It is recommended for people to give out the fitrah on the Day of Fitr before going out to the prayer place. If they advance-pay it before the Day of Fitr, it is valid. But, if they delayed it beyond the Day of Fitr, it is not waived, and it is still an obligation on them to give it out.

Monday, September 11, 2006

Who Might Burn You More, The "Riba" Free Bank or The Conventional Bank? PT1

As Salaam Aliakum:

You can find all sorts of information when it comes to buying a home the “haram” way or “halal” way over the net. My husband and I went to several Muslim owned “Islamic” mortgage groups as well as non Muslim owned companies and I would like to share with you my experience and ask you to decide for yourself which is the best option.

Professionalism

Every company we dealt with was profession and courteous for the most part. Muslim or non Muslim didn’t matter and over all I would give LARIBA and Guidance Financial both B+ grade marks for customer service.

What they say –VS- What is done

Guidance Financial and LaRiba each have small differences about them which they claim makes the “different” than regular banks.

Guidance Financial
The customer and Guidance are co-owners who own specific shares in the home. Guidance acquires its co-ownership stake through a Limited Liability Company (or ‘LLC’) specifically created for this purpose. In the case of a home purchase, a customer finds a home that is priced to sell, for example, at $100,000. The customer can place 5% (or $5,000) into the transaction, while Guidance provides the remaining 95% (or $95,000). The customer is 5% owner; Guidance is 95% owner.

If replacing an existing mortgage, an appraisal will be done to determine the value of the home. For example, a home is appraised at $100,000 and has an existing mortgage with a balance of $70,000. Guidance would pay off the mortgage balance. Since the home was appraised at $100,000, Guidance would now be 70% owner of the home. If the customer requests the cash-out option in this example, Guidance could provide an additional $20,000 of financing by increasing its ownership in the property to 90%.

Guidance may introduce other investors to take a co-ownership stake in the property. In doing so, Guidance’s objective is to continue to service its customers’ needs to their satisfaction and to ensure that investors will always be bound by their rights and obligations as co-owners in the property. A regular bank would simply say they are selling your mortgage to another lender.

The company charges you a “Profit Payment” or “Fee” (as LaRiba wishes to label it) for this service over top of the “rental” rate. Which some will claim is not based on the interest rates in the market at all but on the value of property and rental rates in the desired neighborhood.

To be continued...

Monday, August 21, 2006

Calculate your Fed. Tax withholdings and Adjust them

IRS Withholding Calculator

When you're done with that, don't forget to adjust your withholdings!

Why?

Because that big check you get after April 15 is NOT a good thing. That's YOUR money. Literally.

The reason you get that check is becuase the IRS took too much out of your paycheck, and instead of say, giving a monthly refund, they just hold on to it, spend it, and, after you file your returns, give it back to you.

While the gov't will tell you "This is going to highways, parks, education and arts." anyone who pays attention to the news will know that most of the tax revenue goes to government pet projects and the war effort. A glance at the federal budget will tell you where your money is REALLY going.

So, since this is YOUR money, wouldn't it be better if YOU decided what it got spent on? Of course it would.

The links above will help you do just that.

So, go ahead, cut off Uncle Sam's IV drip of free money. Maybe then they'll finally tax people who can afford to pay them instead of the working poor (or just the perpetually broke like most of us).