Your Bottom $$ Matters

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So ever get those telemarketing calls about saving $$ on long distance on items and ‘falana dhang dhamaka’?

How about calls from the bank on plans to save $$ or financial analysts?

Well, I’ve been thinking its about time to start saving $$ for future investments without collecting interest.

So I’m asking y’all what method have you used that has proven to be useful and is economically viable without any illegalities.

Jitna Diya Sarkar Nay Mujko, Itni Meri Auqat Nahi, Yeh Saab Tumhara Karam Hai Aqa, Mujh Mein Aisi Koi Baat Nahin.

It is difficult to say what is impossible, for the dream of yesterday is the hope of today and the reality of tomorrow.

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are you a student? bachelor? renter? full time employed? it really matters what ur status is

one thing that comes to mind is, if you're renting, dont! try to piece together some $ and mortgage a house or apt. that way your rent is going to your pocket and not disappearing in thin air.

as for lil things, umm. quit eating out alot. use the car less often (less maintenance, less gas consumption).

im not sure if i fully agree with the terms that banks set forward when you're investing for a higher return. on second thoughts, those ING Direct commercials seem quite interesting.

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[quote]
Originally posted by cHEeGUm:
one thing that comes to mind is, if you're renting, dont! try to piece together some $ and mortgage a house or apt. that way your rent is going to your pocket and not disappearing in thin air.
[/quote]

Explain that again please? Rent going into your pocket?

Comparison between renting and financing (without even touching the illegality of paying interest)
1.
Renting: 2-3 bed apt or house, for a monthly rent of $1100pm (US average)
Financing: 2-3 bed house, for a monthly mortgage payment of ~$1500pm (after a hefty down payment)
2.
Renting: You dont own the place.
Financing: You DONT own the place.(the bank does)
3.
Renting: You are NOT responsible for maintenance, hence you dont pay for their repair..
Financing: You are responsible for all problems, so you PAY for every clogged drain, and every blown outlet!
4.
Renting: Insurance not required.
Financing: Homeowners insurance required (add another several $100s to ur mortgage payment)
5.
Renting: No taxes on the property.
Financing: Pay up or lose your house.(the banks house, i mean)
6.
Renting: Ability to move on a short notice in case of job switch or transfer...flexibility.
Financing: Find a buyer, then think about it, depending on how much u sold it for.
7.
Renting: The most you will be tied up will be for 1 year, depending on your lease agreement.
Financing: 30 year mortgages. By the time you can call the house your own, you are 65, and thoroughly dislike the house.

So a rental costs you a flat rate, depending on how large a place you are renting. Whereas a mortgage holds you hostage for 30 years, and you pay around twice the cost of the place eventually, not even including the amount you spend in taxes, insurance and maintenance:)

4

My brother took this huge plastic jar, put it inside his closet, and everytime he had some spare change or cash, he'd drop it in. By the end of the year he had a lot of money in there. smile

As far as investments are concerned, I have no idea. sowwy

Learn to love yourself, then learn to love one-another

This is not my Paradise

5

If you are working and your company offers 401K plan, then do participate in that. It can be a good saving at the end.

Go for Galaxy account...if you dont want to invest and keep track of stock market yourself.

Financing a house isnt a bad idea either, usually what people do is they mortgage a house and put a portion of it on rent...which gives them enough to pay for the monthly installments.

[This message has been edited by pumpkin (edited April 22, 2002).]

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Re: Your Bottom $$ Matters

I would like to openly admit that this post (since i first read it way back when) has changed my opinion on a lot of things. It is indeed an eye opener. Thankyou.

I would also like to add to this list that the amount of interest you end up paying for 25-30 years is very close to the actual price of the home you buy. So if its a $300,000 home, you would have paid close to around $170-200k in interest. People who complain that after so many years of renting you still wont have anything left to call your own.. consider this interest not paid as something that you you can call your own. And if you even remotely give a crap about your religion then theres no bigger consolation than not having to pay interest.

Sincerely,
Captain Lota

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Re: Your Bottom $$ Matters

Cheeghum are you a student? bachelor? renter? full time employed? it really matters what ur status is..

how about Faltoo bro?

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Re: Your Bottom $$ Matters

^ Theres hope for everyone. Even faltoos. :p

Sincerely,
Captain Lota

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Re: Your Bottom $$ Matters


I think all the points made about rent and mortgage are correct. But to make an intelligent rent-vs-buy decision, you need to factor in a few additional points.

If you live in a place where property values will increase over time (and they almost always go up on a long term), then a house can be a valuable investment vehicle. Your equity builds up rapidly as house values go up, while your mortgage payment remains the same. You can use this excess equity to move to bigger and better house or as a cushion for major financial needs etc. So rising property values give rise to a tidy profit for the home-owner.

With rent, regardless of whats the value of the house is, you don't profit from it at all.

Secondly, hardly anyone lives in the same house for 30 years. The average family in US stays in the same house for 7 years. With changing family situations, age of kids etc, people frequently change homes. So, owning a house 100% is unlikely, nor necessary, unless you have a windfall income. No one buys a home thinking they will live there for 30 years. It will be very unfortunate if you are forced to live in the same house for 30 years.

Thirdly, from a tax standpoint, the interest you pay for mortgage is tax-deductable. Not so for rent. Not only that, but in most cases, the property tax you pay is also tax deductable. For people in high tax brackets, the difference can be fairly substantial.

Lastly, what we have seen our parents and relatives do back in Pakistan is to rent all their lives and save so they can build/buy a house at the end of their careers etc. The house they ultimately build or buy is usually paid for (in most cases) on the day they move in (like they used to buy cars with 100% cash payment). With mortgage you reverse the concept and start living in your home from day one and pay for it as are living in it. This is a more advanced banking product. I have heard this is making big inroads in Pakistani market too and a lot of people are now financing their home purchases. As long as you use credit responsibly, its not necessarily a bad idea.

Ofcourse, religious implications on interest is an additional and important factor to consider. There is considerable difference of opinion on bank interest, so I am not going into it. But to make a rational and intelligent decision, all aspects of buy-vs-rent should be considered.

If you want to make money from the property appreciation, but don't want to dabble into usual bank interest, nor have the money to buy property outright, look into various Islamic financing products available.

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Re: Your Bottom $$ Matters

Do I hear hypocrisy? or do I hear Jamatia? :stuck_out_tongue: There is only one Islamic opinion about interest, it is HARAAM. Jidher faida na ho udhar bhi rationality and intelligence should not supercede set rules of Islam. :amamah:

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Re: Your Bottom $$ Matters

Pakistan Supreme Court Sharia Appeals Court ruled that all bank interest is similar to riba and thus completely haraam. On the other hand, Al Azhar University ruled that modern day bank interest is different from riba and is not haraam.

I am not commenting on which opinion is right or wrong, point is as much as you, or anyone, wants to believe that there is only one Islamic opinion on this topic, not really. There are more than one opinions. Whether you completely disagree with them/that, or negate its existence, is up to you.

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Re: Your Bottom $$ Matters

Faisal, bore na karain yaar, warna i will cut and paste all of maulana Taqi Usmani's ruling here.

BTW i will appreciate if you can post a link to al-azhar's ruling or at-least the name of the scholar so I can search. Muchos gracias.

Allah Re LarkiyoN
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Re: Your Bottom $$ Matters

Use this to start your search and then go forward from there

http://news.bbc.co.uk/2/hi/business/2488525.stm

By the way, I have not only read Taqi Usmani’s entire ruling, but have participated in several round-table conferences to discuss it as well. I think he has some really compelling arguments. At the same time, I don’t think he adequately addressed the issue of time-value of money, in his ruling. TVM was not a factor at the time before paper currency. Anyway, I will let you do the research on all points of view, before adding any more comments on the topic.

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Re: Your Bottom $$ Matters

**
Comparison between renting and financing (without even touching the illegality of paying interest) **

dont touch the illegality of paying interest, although Faisal has shown differing schools of thought on this topic.

**1.
Renting: 2-3 bed apt or house, for a monthly rent of $1100pm (US average)
Financing: 2-3 bed house, for a monthly mortgage payment of ~$1500pm (after a hefty down payment)

The downpayment is still yours and it is called equity in your new house

*2.
Renting: You dont own the place.
Financing: You DONT own the place.(the bank does) *

you DO own a portion of the place, your downpayment being one and principal payments as well. If the house appreciates and you sell it, you get to pocket that difference not the bank :)

3.
Renting: You are NOT responsible for maintenance, hence you dont pay for their repair..
Financing: You are responsible for all problems, so you PAY for every clogged drain, and every blown outlet!

you DO pay for repair of apartments which is rolled into the rental rate, the apt owners dont repait their property after each renter leaves the place in shambles on a fi-sabeel-Allah basis. They factor it into the monthly rental rate.

*4.
Renting: Insurance not required.
Financing: Homeowners insurance required (add another several $100s to ur mortgage payment) *

renting insurance is not required, however recommended. Yes if you are some single college student living in a studio apt, you prolly dont have nuff of value in there to bother insuring, but people whoa re renting single family homes or executive condos more often than not do get insurance as the value of their belongings is at a level that they want piece of mind.

Secondly, you dont pay for insurance directly but your property owner sure as hell is paying for insurance, and guess what..its also not fi-Sabeel-Allah... that charge is a passthru to the renters and included in the rental rates.

*.
Renting: No taxes on the property.
Financing: Pay up or lose your house.(the banks house, i mean)
6.
Renting: Ability to move on a short notice in case of job switch or transfer...flexibility.
Financing: Find a buyer, then think about it, depending on how much u sold it for. *

Renting- again taxes are baked into rental rates
yes it does offer flexibility, although in some states you have hefty finces for breaking a lease including making payments until the lanlord finds a nee tennant.
Additionally, deoending on your level of experience and the company youa re going for, They would offer you temp housing until you sell your house.

7.
Renting: The most you will be tied up will be for 1 year, depending on your lease agreement.
Financing: 30 year mortgages. By the time you can call the house your own, you are 65, and thoroughly dislike the house.

mortgage can be 30 year or 15 year, and no one is stopping you from paying it off early.
It is also a little naive to think that people live in the same house for 30 years. statistics clearly show that most people change several houses in their lifetime

So a rental costs you a flat rate, depending on how large a place you are renting. Whereas a mortgage holds you hostage for 30 years, and you pay around twice the cost of the place eventually, not even including the amount you spend in taxes, insurance and maintenance:)

1- you do NOT get the same amount of space in the same type of area for rentals than you can get if you are buying..

2- Mortgage does nto hold you hostage for 30 years, you can sell anytime, and guess what, property rate appreciation is all in your pocket. if you are renting you get zero.

3- at the end of 10-15-30 years you have your own place..no more payments, rent you will pay until the day you die.

4- you can do a reverse mortgage when you are retirning, and get an annuity payment from a bank who is buying you house from you

5- it does not take a rocket scientist to figure out what the growth in property prices meansd to owners and investors.

nice try, but no cigar.

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Re: Your Bottom $$ Matters

While there are advantages of buying a house, it really depends on your lifestyle. If you are single and don't want to pay a heavy amount in interest to the bank, then rent a posh penthouse instead and enjoy your life as opposed to buying a mediocre house in Boonevielle.
Lotay, since you are not married and don't give a crap about appreciation of the value..I think you should just rent and party.

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Re: Your Bottom $$ Matters

rental penthouses in a halfway decent building would cost you in the same ballpark as owning the place. Yeah people can rent hole in the walls type of apts that I see some folks rent in NYC, but they aint no posh bachelor pads ;)

Lotay..you dont give a damn about appreciation in value right now, but you will. Real estate prices will continue to go up, maybe not as fast as they had in the last few years but they will continue to go up. It is much easier to move up if your house/condo appreciated with the market and you sold it and bought a more expensive place, but if you sit out and then want to get in th market a few years from now it will be a diff story. I know many people who bought homes a few years back and the value has appreciated to a point that had these ppl waited, they would not have been able to buy the house that they are in now.

oh, and those debating the sharia legal view of mortgage, do you know what the basic difference is between a conventional mortgage and an "islamic" financing. While you are at it, please figure out why it costs more for you as a consumer under "islamic" financing rather than a conventional fixed mortgage. :)

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Re: Your Bottom $$ Matters

islamic financing is a load of crap. they r out of funds and r turning their loans to one of the bigger loan financers like rest...yes on interest. so much for fooling everyone by calling interest something it is not.

if u plan to live somewhere for more than 3 yrs... always buy. heck treat it as investment...depending on where u r it can be a good alternate source of income.

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Re: Your Bottom $$ Matters

Well tell us why.

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Re: Your Bottom $$ Matters

^ nope thats your homework :)

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Re: Your Bottom $$ Matters

This may be completely off topic,

But can any one of the Intrest opposing Guppies, specially because of Islamic Reasons, Truthfully Stand up and with honesty say that they have never ever used or been part of a venture that has had Intrest as a basic component or medium of doing business.

And Yes I am also including the Religious Fanatics here, oh and before I forget, remember lying is a major sin too.

Aejaz