Wednesday, February 15, 2012

Makeover in progress....

Assalaam Alakium ladies!

How's your day been? Alhamdulliah, mine has been great! As stated in my previous post, I was flipping through David Ramsey's book The Total Money Makeover. Well I've finished "flipping" and wrote a few quick notes that I'd like to share with you all. 

First of all, I'd like to state that in Islam being debt-free is a Sunnah. We all know that Riba (interest) is forbidden and most of all debt has interest attached. It is encouraged in Islam to pay off debt as swiftly as possible. Here are a few hadiths (sayings of the Prophet, peace be upon him):

"Narrated Salama bin Al-Akwa: Once, while we were sitting in the company of the Prophet, a dead man was brought. The Prophet was requested to lead the funeral prayer for the deceased. He said, "Is he in debt?" The people replied in the negative. He said, "Has he left any wealth?" They said, "No." So, he led his funeral prayer. Another dead man was brought and the people said, "O, Allah's Apostle! Lead his funeral prayer." The Prophet said, "Is he in debt?" They said, "Yes." He said, "Has he left any wealth?" They said, "Three Dinars." So, he led his prayer. Then a third dead man was brought and the people said, Please lead his funeral prayer." He said, "Has he left any wealth?" They said, "No." He asked, "Is he in debt?" They said,  Yes, He has to pay three diners.", He refused to pray and said, "Then pray for your dead companion." Abu Qatada said, "O Allah's Apostle! Lead his funeral prayer, and I will pay his debt" So, he led the prayer."

Narrated Abu Huraira: "The Prophet said, "Whoever takes the money of the people with the intention of repaying it, Allah will repay it on his behalf, and whoever takes it in order to spoil it, then Allah will spoil him."

We all see the importance of paying debt in Islam. Now I'd like to give a few of Dave Ramsey's tips. Note: I won't be posting too many details because I don't want to take away from Dave Ramsey. If you can, I recommend buying the book to get a detailed explanation. 

First of all, write down all of your debt from smallest to largest. Then pay off your smallest debts first. This way you get an emotional response to paying off debt and feel that you can do it. 

Once you have written down your debts and have started paying them down, write out a budget. Be detailed as possible! After this, save $1,000 for an emergency fund. This is only for emergencies, not that new Ipad3 coming out! Once you're debt is being paid off start saving enough money to last you 3-6 months of expenses and add that to the $1,000 emergency fund. This is for an emergency, for an example if someone loses their job. This money is used to pay bills and bills only. 

Once you have conquered these steps you are on your way to debt freedom! It's really that easy. It takes some planning and organizing to accomplish but it'll be a great feeling when you finally have ZERO debt. Another quick tip is to implement the "envelope system". Divide your expenses into categories such as food, gas, clothing, entertainment. Get an envelope for each category and put a certain amount of money in each envelope. Once the money in that specific envelop is gone, you are done for that month or pay period. Any money left, put in savings. 

I hope this helps some of you and if you are doing this now, please share how this is working for you and your family!

InshAllah, in the future I'll be posting updates on the Writer and I's budget and "Total Money Makeover".

Have a great day!


~Hijabi Butterfly~

1 comment:

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