Islamic Financing and Transactions

Islamic Financing and Transactions with Sheikh Joe Bradford

Opening and Introduction

In the name of Allah, the Most Gracious, the Most Merciful. Praise be to Allah, Lord of the worlds. Peace and blessings be upon our Prophet Muhammad and his family and all his companions.

Praise be to Allah, today it is our honor and our privilege to host Sheikh Joe Bradford. Sheikh Joe Bradford is an American scholar of Islam, an instructor and ethical investments advisor. In 2004, Sheikh Joe graduated with an LLB in comparative Islamic law and legal theory from the Islamic University of Medina.

His main academic interests at that time were financial law, legal maxims and the legal thought of the Hanbali school. Then in 2005, he became the first American to be accepted to the Masters of Law program in the same university. His research during this period focused on euthanasia, arbitration in minority Muslim environments, business structures in medieval Islamic law and the use of weak hadith in the Hanbali legal school.

During this time, Sheikh Joe took the opportunity to spend extensive time studying classical texts in legal theory, seerah, law and theology. He also began to work in document review for several private and governmental entities, reviewing drafting and legal compliance issues. Shortly thereafter, he started work as a senior consultant in Islamic banking, specializing in deal structuring, drafting review and Sharia compliance.

A majority of his work focused on researching syndicated finance deals, corporate finance and investment products. In 2009, Sheikh Joe received his Masters of Law on adjudication in the Shafi'i school of Islamic law through the work of Mamluk era polymath, Badr al-Din al-Zarkashi. After this, he continued his corporate work, gaining experience in treasury products, mergers and acquisitions, syndicated loans, corporate finance in addition to other areas.

After returning to the US, many questions about personal finance were posed to Sheikh Joe. He began working with lawyers and financial planners to explore solutions to these issues in financial planning and estate planning. To formalize his study of the topic of personal finance, he attended Rice University's financial planning program.

Some of his projects leveraging this experience include the Islamic estate planning tool, the Muslim money guide and several investment funds that he now advises on. Based on seminars, Sheikh Joe has delivered and answers to the numerous questions he has received over the years on Zakat. He wrote the simple Zakat guide.

Currently, he is researching mortgages and has delivered several seminars on this topic and others. Sheikh Joe is currently an adjunct at several institutions, teaching the Arabic language, Islamic law and Quranic tafsir. In addition to teaching, he has been writing and furthering his research on financial transactions, pre-modern Islamic reform movements and the Hanbali school.

So we are very pleased to have him with us today. Let's welcome Mashkoora. Peace be upon you.

Sheikh Joe Bradford's Opening Remarks

In the name of Allah and praise be to Allah and peace and blessings be upon the Messenger of Allah and his family and companions. O Allah, teach us what will benefit us and benefit us with what You have taught us and increase us in knowledge, O Lord of the worlds.

First and foremost, (مَنْ لَمْ يَشْكُرِ النَّاسَ لَمْ يَشْكُرِ اللهَ - Man lam yashkurin-naasa lam yashkurillah) - "Whoever doesn't thank the people has not thanked Allah." So I want to thank my good old friend, Sheikh Ahsan. This is the first time we have seen each other in possibly 16 years.

SubhanAllah. And Alhamdulillah. (لَا تَصْرُّ مُفَارَقَةُ الْأَبْدَانِ إِذَا اجْتَمَعَتِ الْقُلُوبُ - La tasurru mufaraqatul abdaani idhajtama'atil quloob) - As Sufyan said, "when bodies are separate, it won't harm you as long as your hearts are together." So I ask Allah to bring our hearts together and to give you the glad tidings that the Prophet (peace be upon him) had given to those who come out seeking information and seeking knowledge for answers about their faith.

When he said (مَنْ سَلَكَ طَرِيقًا يَلْتَمِسُ فِيهِ عِلْمًا سَهَّلَ اللَّهُ لَهُ طَرِيقًا إِلَى الْجَنَّةِ - Man salaka tariqan yaltamisu feehi 'ilman sahla Allahu lahu tariqan ilal jannah) - "Whoever sets out on a path seeking knowledge, then Allah will make a path easy for him to paradise" (Tirmidhi 2646). May every one of you have an easy path to paradise and an easy path to knowledge in this life.

Framework for Understanding Islamic Finance

When we talk about money matters, wealth, I want to qualify a few things before we start. Islamic finance as an industry in many countries is not necessarily what we will be speaking about today. In that it has a specific set of nomenclature, a specific set of contracts and it may be applied in certain countries in certain ways and certain countries not. But what we want to speak about today is how we as Muslims interact with the financial system that we are faced with here in the United States.

How we as Muslims can create alternatives and seek solutions to our needs that fit our values within the framework that we live. So we are talking about Islam and finance, but maybe not Islamic finance as an industry that is found in certain countries. There are several key questions that always come up with everyone, within or without the Muslim community.

Issues of spending, how do we spend our money? How do we earn our money properly? How do we save for retirement? How do we fund the education of our children? The volatility of markets and the fears that

we have of investing in certain things. How do we deal with debts? How do we prepare for possible debt by creating an emergency fund? What do we do when we have no plan?

And so today what I want to do is I want to give you a broad framework that you can work with. I take a personal position in that I am not here to co-sign or to rubber stamp current products that are out there. I'm not here to tell you do this, don't do that. Because each and every one of you has a different need and a different circumstance. But what I will endeavor to do today is to give you the keys by which you can make an educated, informed decision about issues that come up in your life.

When we get to the Q&A, we'll answer certain specifics. But when we're talking today, we want to set the ground rules, the foundational rules about dealing with money, dealing with wealth.

Three Main Topics

So today we're going to talk about three main things:

1. Building wealth
2. Preserving wealth
3. Protecting wealth

Building Wealth: Reorienting Our Relationship with Wealth

When we talk about building wealth, it's extremely important that we start to reorient what we think about, the way that we look at wealth. The Prophet (peace be upon him) would awake every morning and after Salatul Fajr, he would make dhikr. And one of the adhkar that he would say consistently was [seeking refuge from poverty].

So being poor as a Muslim is not a virtue. But neither is being rich. Being poor is not a virtue as a Muslim. But neither is being rich.

The Prophet (peace be upon him), he was asked, what is wealth? He (peace be upon him) took us away from the material and towards the ethereal. He (peace be upon him) said (لَيْسَ الْغِنَى عَنْ كَثْرَةِ الْعَرَضِ وَلَكِنَّ الْغِنَى غِنَى النَّفْسِ - Laysa al-ghina 'an kathratil 'aradi wa lakinn al-ghina ghina an-nafs) - "Wealth is not having lots of things. But wealth is wealth of the heart" (Bukhari 6446). It's wealth of the soul.

So when we realize that the Prophet (peace be upon him) (فُتِحَتْ لَهُ خَزَائِنُ الدُّنْيَا وَالْآخِرَةِ - Futihat lahu khazainu ad-dunya wal akhirah) - "The treasures of this world and the next were open for him." But in his humility, to instruct us about how to properly use our wealth and who we could do business with, when he passed away, his shield was pawned for a few measures of wheat with a Jewish salesman in the city of Medina.

After he passed away, a few dirham were taken and they paid off that debt and retrieved his shield. Was it because he was poor? Was it because he couldn't ask Allah and it wouldn't be given of him? No. But he

wanted to instruct us on how to properly deal with our wealth and who we could do business with and how we should do that business.

Planning for Wealth

Having wealth is a trust and it's important that we plan for that wealth. Sa'd ibn Abi Waqqas was on his deathbed. The Prophet (peace be upon him) went to visit him. He said to him, (يَا رَسُولَ اللَّهِ إِنَّ لِي مَالًا كَثِيرًا وَلَيْسَ يَرِثُنِي إِلَّا ابْنَةٌ وَاحِدَةٌ - Ya Rasul Allah, inni li malan kathiran wa laysa yarithuni illa ibnatun wahidah) - " Messenger of Allah, I only have one daughter and I have a lot of money. Should I give away all of my money in charity?" He said, No. Should I give away half of my money in charity? He said, No.

Should I give away a third of my money in charity? He said (الثُّلُثُ وَالثُّلُثُ كَثِيرٌ إِنَّكَ أَنْ تَذَرَ وَرَثَتَكَ أَغْنِيَاءَ خَيْرٌ مِنْ أَنْ تَذَرَهُمْ عَالَةً يَتَكَفَّفُونَ النَّاسَ - Ath-thulthu wath-thulthu katheer, innaka an tathara warathataka aghniya'a khayrun min an tatharahum 'alatan yatatakaffafun an-nas) - "A third, but a third is still much. It is better that you leave your family wealthy than to leave them impoverished, begging of the people" (Bukhari 2742).

So notice, while he was instructing us, don't endeavor to be a poor person, but don't endeavor to be a rich person. He's telling us, manage the resources that Allah has given you properly. Whether it's a dollar or a million dollars. The difference between the million and the one is the intention that we have.

Do we hold it in our heart or do we hold it in our hand? The man who gives sadaqa of one dollar can have greater reward than the one who gives a million dollars. Because the one who gives a million dollars, who knows? Maybe it's, you know, spare change for him. Maybe he lights his fire at night with, you know, a few hundred thousand. Right? And the man who has the one dollar, maybe he's giving it because that's all he has.

Being Stewards of This World

The Prophet (peace be upon him) emphasized that we are to be stewards, caretakers of this world. He said (إِنَّ هَذِهِ الدُّنْيَا حُلْوَةٌ خَضِرَةٌ - Inna hadhihi ad-dunya hulwatun khadirah) - "This world is verdant. Sweet. Verdant" (Muslim 2742). You know what verdant means? You see the brother's green shirt? Imagine a green that's five times deeper. How many of you have been to North Carolina? How many have seen the beautiful green mountains there? And the Japanese kudzu that's taken over the mountains and makes everything green. How many of you have seen the mountains of Kashmir?

But you see that lush green? Allah says مُدْهَامَّتَانِ - "Lush green" (Quran 55:64). So green that it's almost black. It's enticing. You want it. The color of money. That's this dunya, this lowly life. الدُّنْيَا مِن الدُّنْوٌ - From lowliness. But it's sweet as well. We have an appetite for it.

Then He said, This life, this lowly life is sweet and green verdant. وَإِنَّ اللَّهَ مُسْتَحْلِفُكُمْ فِيهَا - "And Allah has made you stewards in it." "فَيَنظُرْ كَيفَ تَعْمَلُونَ - "To see how you will act." So each and every one of us will be tested by the wealth that we have. Regardless of it's a dollar or if it is a million.

وَلَكِنِّي أَخْشَى أَنْ تُفْتَحَ عَلَيْكُمُ الدُّنْيَا كَمَا فُتِحَتْ عَلَى الَّذِينَ مِنْ قَبْلِكُمْ فَتَنَافَسُوهَا كَمَا He (peace be upon him) said تَنَافَسُوهَا وَتُهْلِكُكُمْ كَمَا أَهْلَكَتْهُمْ - "I don't fear poverty for you. But I fear that wealth will be opened up for you like it was opened for those before you, and you will compete for it as they competed for it, and it will destroy you as it destroyed them" (Bukhari 3158).

The Example of Ibn Umar

Ibn Umar (may Allah be pleased with him) once craved - one narration it says fish and another it says falooda. Falooda is nicer to think about. Everyone know what falooda is? Falooda is like a sweet. It's got, I don't know, it's got like a million different ingredients. It's like ice cream and noodle. I don't even know how you put noodles in ice cream but I guarantee if you eat it you're going to think you have diabetes afterwards.

So he craved this one day. So he sent one of his servants: go to the market and buy ingredients for this. So he went to the market and bought it. He came home. He called another one of his servants: take these ingredients and make falooda. He made the falooda. He said go. He called the third: Take this falooda deliver it to the poor people down the street.

So the guy got back speaking with the other servants. Hey, you were gone. What happened? He had me buy it. He had me make it. He had me deliver it. We didn't get any. He went to him: Abu Abdur Rahman, you had us buy it, make it, deliver it. You didn't even eat from it. We didn't get to eat from it. What?

He said (إِنِّي اشْتَهَيْتُ فَالُوذَجًا ثُمَّ تَذَكَّرْتُ قَوْلَ اللَّهِ تَعَالَى: لَنْ تَنَالُوا الْبِرَّ حَتَّى تُنْفِقُوا مِمَّا تُحِبُّونَ - Inni ishtahaitu faludhan thumma tadhakartu qawl Allah ta'ala: lan tanaalu al-birra hatta tunfiqu mimma tuhibbun) - "I craved falooda but then I remembered Allah's statement: 'You will never attain righteousness until you give from what you love''" (Quran 3:92). "And I loved falooda today so I gave it away."

So sometimes it's about going beyond the material to gain the pleasure of Allah in the next life.

Changing Our Orientation Toward Money

Now when we talk about changing our orientation towards money it means exactly that. To stop looking at money and things and property as what truly gives us worth and truly makes us wealthy. But what truly makes us wealthy is that which we have in our hearts. The iman that we have in Allah. The reliance that we have in Him. The tawakkul. The assurity that we have that we will always be provided for.

And when we can do that then we should know that we have no need to try and seek the haram in order to get ahead. In a hadith in the Musnad, the Prophet said (إِنَّ رُوحَ الْقُدُسِ نَفَثَ فِي رُوعِي - Inna ruh al-qudusi nafatha fi ru'i) - "The Holy Spirit breathed into my countenance, breathed into my soul" (أَنَّ نَفْسًا لَنْ تَمُوتَ حَتَّى تَسْتَكْمِلَ رِزْقَهَا - Anna nafsan lan tamuta hatta tastakmila rizqaha) - "that no soul will die until it completes all of its sustenance" (وَتَسْتَوْفِي أَجَلَهَا - wa tastawfi ajalaha) - "and completes its appointed time here on earth" (Ahmad 20334).

Investment vs. Savings Mindset

After we can then reorient ourselves and how we think about our wealth and know and have that surety that we won't die unless we have completely gained all that there is and completed our life span, we have to then start thinking about our lives differently.

When I say investments what do most of you think of? Stocks. What else? Private equity, real estate, whatever. Almost immediately we go to the stock market. You will never make as much money in the stock market as you do through the primary source of earning in your life which is the form of employment that you're in.

You will make more money in the jobs that you work - whether as an independent businessman, as a day laborer, as an employee at a Fortune 500 company, as a small business owner - you will make more money doing that in your entire lifetime than you ever will from investing the savings that you have.

Therefore, it is imperative in the reorientation of wealth that we stop thinking about our investments as investments but we think about these investments as savings. The only thing we're doing is putting some money away, stopping inflation from eating away at it and having enough money to pay our zakat from it. And then we're consuming what's left over.

But what we invest we should invest in ourselves - in our personal development, in our financial stability, in our emotional stability, in our spiritual stability, investing in our time, in our families, making sure that becoming the best person that we can be is primary in our life.

"Because what is with Allah is not gained through His disobedience."

When we invest in ourselves, when we get the certifications that we need in our work, when we do what we need to do at work to be the best employee, to be the best employer, to be the best small businessman, large businessman, whatever we do - when we do that, when we embody the idea of ihsan of that beautiful excellence of intending through everything that we do to be an act of worship for Allah, when we know that Allah is looking at us even if we do not see Him - then we're making the greatest investment that we can make in our life.

Preserving Our Wealth

After that we get to the idea of preserving our wealth. How do we preserve our wealth? Like I said, what we think of as investments is really savings. And now that we have a little money left over we want to put it away.

Do you know what the most common form of finance in the United States is? Real estate? What else? Something more common. It's called mattress finance. It's where everyone puts money under their bed. That's the most common form of finance in the U.S.

So when we have some money left over we many times forget to budget and to make a plan for what we're doing in our life. To have not only a financial plan but a life plan. To not only think about what are we going to do with this little bit of money that's left over to save it and allow it to grow where we don't have to touch it but also what is it going to be used for later on.

And the reason why we can't do that is because many times we're not thinking and making a plan for our money. We're working for our money. We're not making our money work for us. And that all starts from taking and making a conscientious decision to reorient how you think about your life and to know that many of the challenges that we face with our finances are not due to money.

The Ideal Day Exercise

Here's a homework assignment. Everyone go home today and take out two pieces of paper. On one piece of paper I want you to write from 5 a.m. to 12 midnight. Hours on a line. And at the top I want you to write "my ideal day." And this would be the day in which you had all the money in the world. All the time in the world. What would you do during that day?

Well, I'd wake up a little bit before Fajr. I'd make wudu. I'd pray a little tahajjud. I'd make witr. I'd take a little nap. I'd check on my kids. I'd go to the masjid for Fajr. I'd go for a run. I'd then report to my Fortune 500 company and manage it.

Go through the entire day. Ask yourself what you would do. Then take the other piece of paper and do "my actual day." What actually happens. Well, I woke up a little late for Fajr and so I rushed to make wudu and I made salat home and then I rushed the kids to school and then I did this and I did that. Right? And then line them up together.

And you'll start seeing that the issues that you think you need money for are simply issues of personal, emotional and time management. That they don't need money. They need wealth of soul. And when you can fix those you will find money coming to you.

Focus and Intention

The Prophet (peace be upon him) said,

"Whoever has this world as his intention, Allah will disperse his affairs and poverty will be placed right between his eyes. That's all he'll see. Thinking that he's poor. And nothing from this life will come to him except what was written. And whoever has the next life as his intention Allah will gather his affairs together for him"

"And this world will throw itself at his feet" (Ibn Majah 4105).

How many of you have small children? So when you have small children when they run up to you at the door when you come home what do they do? They grab you at the ankles and you almost trip over and you fall. That's the meaning of the word in the hadith

- It's something throwing itself at your feet so much with the force that you fall over. You're overwhelmed.

But it all goes back to that thing of reorienting ourselves about our wealth. And when we've done that then we can start to use the surpluses that we have in both time and money to work for us.

The Prophet's Budgeting

The Prophet (peace be upon him) budgeted. He had a budget. It might sound strange. In the hadith in the sahih he (peace be upon him) said

"If I had the like of Mount Uhud in gold, I would not like it to stay for three days except that I paid it in the path of Allah. Except for some money I held back to pay off my debts" (Bukhari 6445).

So there is a consciousness about financial responsibility towards others. Financial responsibility towards his home. And this brings us to another very important point. And that is having an intention in our financial affairs.

Major Purchases and Financial Intentions

Major purchases. We find ourselves struggling sometimes to make major purchases. Or we find ourselves struggling from the debt of major purchases. Why? Because if we don't have a credit card we're trying to save. And if we do have a credit card we're oblivious to the fact that that credit card is gonna come back and bite us one day.

Oh, we're just, you know, one click on Amazon. We're just ordering this and ordering that. And then we... How did I spend $1,917.47 in the last three days? That's impossible. And then you go through your bank statements, you go through your Amazon account, you go through eBay, you go through all these different things and then you realize I didn't have an intention for these purchases. I was just buying. I wasn't giving thought to what I was doing.

In a hadith that's narrated in the Sunan of Ibn Majah, the Prophet (peace be upon him) said,

the amount, the sales price and place it in something similar then it's more likely to not have any blessings" (Ibn Majah 2490).

What's the example here? Somebody says, Hey, my cousin has this great business idea. He said that we're going to get a thousand percent ROI, return on investment. I'm going to sell the house. And honey, yeah, you'll be out of a home for a few days but we'll make so much money in the next week we won't have anything to worry about.

So he goes and he takes this stable amount of wealth and puts it into something unstable. Puts it into something which is speculative. Puts it into something that he hasn't studied properly. He didn't have the right intention or the right knowledge about.

Most people who lose money lose money because they don't give it enough thought and they don't give it enough study. I have a personal friend came up to me and said, Man, I have a really big problem. What's that problem? I've lost my life savings. How did you lose your life savings? Well, you know, I was always apprehensive about investing and then somebody told me, Hey, you live in Houston. Oil and gas, man. Can't lose. I put all my money in oil and gas. And then the price of oil tanked to below $40. I don't know what to do with my life now.

Because we don't take the steps to study that which we are investing in. As important as it is for something to be a good investment and halal, it should be something that we understand. There are no black boxes. You can't slide money into something and pull money out.

Learning from Experts

The Prophet (peace be upon him) himself deferred to experts in their trades, in the hadith in Sahih Muslim. When he passed by people that were pollinating the date palms. And he said, لو تَرَكْتُمُوهَا - "What if you left it alone?" (Muslim 2361). They heard it thinking he was saying, leave it alone, like asking rhetorically. He was just asking a question about their expertise.

They came to him later and they said, Oh Messenger of Allah, we didn't get that many dates because we didn't pollinate when we heard you ask us that question. He said أنتُم أَعلَمٌ بِشؤون دُنْيَاكُم - "You have more knowledge of the affairs of your worldly life."

Meaning that, there are stipulations for us as Muslims on how to properly invest and where to avoid because of the damage and the danger that comes from those actions. But, we also have to make informed decisions about what we invest in and how we invest it.

Stock Market Investment Guidelines

So, budgeting and debt are something which are extremely important for building wealth. Now that we've saved some money, we now need to invest slash, remember, new definition, save that money.

What are the two major things that everyone asks about? What's the one thing on your mind coming here today?

I'm almost certain that many of you are going to say buying a home and many of you are going to say what do I do with my 401k, IRA, retirement, stock market, something like that. Some of you might do equity, some of you might do other things but I can almost guarantee that these are two major questions that you may have in your mind because I know many people ask about these.

So now that we've saved that money, we have that little bit of surplus left over, we want to invest it or in fact, save it. We need to make sure that we're investing in those things which are permissible.

Now regardless of whether we invest it through a brokerage account in the stock market or we invest it through our 401k at work or we open an IRA and we invest it there or we open a Coverdell ESA education savings account for our children or a 529 which is another type of education savings account for our children. We need to make sure that if we invest in the stock market, we're looking at two things.

Industry Screening

Number one, the industry that we invest in has to have permissible, a permissible industry meaning that it should not be what they call sin stocks. It should not be involved in unethical business practices. So it should not be involved in adult entertainment, in alcohol and tobacco, in intoxicants and drugs. And yes, even though it's allowed in California, it's not allowed to invest in marijuana.

And it should not be involved in armaments and weapons manufacture. Are weapons haram? No. But the Prophet (peace be upon him) forbade us, he forbade us to sell weapons to people that are in a civil war. And he forbade us to sell grapes to people that make wine out of it. Why? Because neither should we harm anyone directly nor reciprocate that harm. We shouldn't affect harm to others, we shouldn't support those who are affecting them.

So when a company may have halal business practices but are unethical and harmful to others, then we have to avoid that as well. They don't have something which is haram to own or trade in from the beginning, and they don't support something which is contraband, which is haram to own or trade.

The Prophet (peace be upon him) specifically said,

"When Allah forbids us to eat something, He also forbids its price" (Abu Dawood 3488). So it's not enough to say, I'm not going to eat the pepperoni, but, you know, I'm not going to go to war with these weapons, but this stock is booming. We can't profit off of it, nor can we own it ourselves.

Financial Screening

And then secondly, the financials of that stock, whether you're putting it in your 401k, or your IRA, or your brokerage account, wherever. So if the industry is clean, then the financials are clean. What do we look for

in the financials? We make sure that the debt to asset ratio is 33 and a third or less.

Why? Because when a company has large amounts of debt, that is a red flag, that something's not right in the company. That they're over leveraging their cash flow, and they may be involved in something that has to do with interest-bearing funds, or loans, or business practices that are not going to be profitable.

Now, does that mean all companies? No, because somebody might invest into a real estate investment trust, a REIT. And the nature of the REIT, and the nature of real estate, is that you carry large amounts of debt because you also have a lot of hard money buys. So in something like a REIT, you might have higher than 33 and a third. But that's a one-off situation.

You also want to make sure that the secondary earnings activities of the company are permissible, and if they're not, then they are less than 5%. Less than 5%. So, for example, Microsoft, is that a permissible stock? What do they do? Software. Apple? Hardware.

Let's say that Microsoft has a seller's program for people that sell their software, and so they give small business loans, and they earn interest off of that. Does that make the entirety of Microsoft stock haram? No. As long as that secondary earning activity is less than 5%, then when I calculate the earnings on my stock, I say, oh, their earnings from other income or interest income were 0.1%. Take 0.1%. I multiply it by the value of the stock times the number of stocks that I have. I get that dollar amount. I give it away in charity.

In a hadith in Sahih ibn Hibban, the Prophet (peace be upon him) said:

(Ibn Hibban 5137)

"Whoever earns haram wealth, then he must give it in charity. And he has the sin for doing so, and he gets no reward for the charity"

Meaning that we have to absolve ourselves, purify ourselves of that wealth. Who do we give it to? Three opinions. Give it to the poor and the needy in general. Give it to anyone who's deserving of zakat. Or give it to public works, like parking lots and bathrooms and things like that.

Now, you may say to yourself, well, how can we even legitimize absolving ourselves of those impure or impermissible earnings? Where are we getting that from? During the life of the Prophet (peace be upon him) in the hadiths in the Sahihin, a man came to the Prophet. He bought ghee the night before.

Everyone knows what ghee is. Clarified butter. If you bake or you know at home, you have ghee. What happens when ghee gets warm? It liquefies. What happens when it gets cold? It solidifies.

So, in non-refrigerated, non-air-conditioned 7th century Arabia, the man's ghee was liquid during the day and solid at night. He wakes up in the morning when it's still frigid and cold, and he sees a mouse fell into the ghee. Now, he doesn't know what to do. He goes to the Prophet. What do I do?

The Prophet (peace be upon him) says,

(Bukhari 5538)

"Throw out the mouse, throw out the little bit around it, and eat from it"

So, the occurrence of something impermissible, that mouse, in the ghee, didn't forbid all of it that was pure because you could make... you could tell where the impurity was. You could distinguish between the two. And so, likewise, if we can distinguish between the impermissible earnings of the stock that are very low, that won't affect the rest of the company, we can then throw those out.

Home Purchases

Next, we want to talk about home purchases. And I want to make another disclaimer. I'm not in the business of approving a company that you want to ask about because inevitably somebody will say, what do you think about this company or that company? And for two reasons.

Number one is, most of the companies won't let you review their documentation independently. So, I can't speak to something that I haven't openly, transparently, reviewed the documentation to. Number two is, if I do say, go with this, then the next day I might find an advertisement on Facebook or something saying, you know, approved. You know, Joe Bradford approved. And I don't want that. I'm not here to take that responsibility. Alhamdulillah.

Understanding Your Position Before Home Buying

Purchasing a home is probably going to be one of the most, the most major purchase that most of us make. And I think that it's important that we understand where we are in life before we even contemplate buying a home.

Some of us may have low income, low savings. So, regardless of whether we're budgeting or not, whether we're saving or not, buying a home right now is outside of our reach. And so, I tell people who are in that situation is that you need the two H's of entrepreneurial success. You know what the two H's of entrepreneurial success are? The H of halal, something being allowed, and hustle. Gotta work. And there's a lot of money to be made in the entrepreneurial space.

Doesn't mean you have to start a multi-million dollar startup. There are a lot of ways. I guarantee that each and every one of you that says to themselves, I don't have surplus cash, or I don't have enough money, or I have a bill that's delinquent. If you go home tonight, you can find between $100 to $500 of things sitting around your home that you don't use. Maybe you bought new and never even opened. And you could sell on eBay, or the LetGo app, or Meerkari, and get some cash to come in.

A lot of us have that. Because, unfortunately, in the United States, there is something called intended obsolescence. Meaning that everything that we buy... You remember, some of us may remember, when our parents' furniture, growing up... Do you remember how bad your foot hurt when you hit your foot on your parents' furniture growing up? Because it was solid wood, and it couldn't move, and you had to have... You had to call your cousins over to the house just to be able to move the couch and get your toys from behind it, because it was that heavy.

But now, you buy something from Ikea, and your five-year-old is flipping it over. So, this intended obsolescence of our things means that we're always desiring to buy more, because we think that what we're buying is not going to be enough, or it's not going to last.

So, if you're in that category, then work to improve your financial state. And if you're in an extremely high-earning category, then maybe you don't have the worries that other people have about purchasing a home. Purchasing a home may be very easy for you.

But for many of us, who may be there in the middle, purchasing a home can be a very long, arduous, and difficult process, primarily because we don't know how much money we're bringing in every month and how much money we're spending, because we're not making a long-term plan for ourselves and for our family, and because we're mystified by the home-purchasing process.

And we expect that it should only take us a few weeks to a month to be able to buy a house. It can be a very long, drawn-out process. It can be a process that can take... Realistically, if you want to purchase a home, you should start a year before, because you think that it's just about buying the house, but in reality, you're buying the zip code that you're living in, and the school district that your kids will go to, and that you'll pay taxes in, and that you'll have neighbors in.

So it's larger than just stuff. It goes back to peace of mind, your emotional state, what's going to come out of that home. And as they say in Arabic, just a phrase, neighbors before houses.

Three Key Questions Before Buying a Home

So, I always tell people, I'm not in the business of rubber-stamping a mortgage company for you. Whether you use a conventional mortgage company or an Islamic mortgage company, there are certain questions that you have to ask yourself before you make this major purchase.

1. Does This Purchase Contribute to My Family's Stability?

Number one, does this purchase contribute to my family's stability? Because I'll tell you, not everyone should or needs to buy a house. Not everyone should or needs to buy a house.

If you're starting out in your career, I'll give you a true story. A friend of mine, he's working for a major oil company in Houston. He's working there for a year, he's contemplating buying a home. I call him up, I say, hey, what's going on with, you know, you're still looking, there's places around my place if you want to buy out here, it's a great neighborhood.

He says, yeah, you know, we've just completely gotten rid of that consideration because now I'm being transferred. So our company, within the first year or two years, especially in oil companies for consultants, they'll transfer them all over the world. Company comes to him and they say, so, we hope you haven't

bought a home, we're going to be transferring you soon, but you have a choice. Do you want to go to Midland, Texas, or Kazakhstan?

And he said, definitely Kazakhstan because I am not going to Midland, Texas. No lie, it takes longer to get to Midland, Texas from Houston than it does to get to Kazakhstan. And there's more to do in Kazakhstan as well. So, he ended up for a few years in Kazakhstan and then from there to India, and now, Alhamdulillah, he's back out here in the States.

Had he purchased a home at that time, he would have had a whole other set of headaches to worry about. Okay, am I going to continue paying the mortgage on a home that I'm not living in? Am I going to rent it out and then hire a property manager? Am I going to leave it with family? What's going to happen with the liability? What's going to happen if it's damaged? Worrying halfway across the world about something that he has no control over.

Maybe if you have older children and you're renting, and your children are going to move out and you're thinking, oh, I'm finally in my career where I've got enough money, let me buy a home, but then you're not taking into consideration that your children may be leaving for college in two years. And so you're going to buy a home for four children or two children, and you're going to be stuck with two or three empty bedrooms in a few years and more expenses than are necessary for you at that time in your life.

So it takes knowledge of your own personal financial situations and your needs for the next year to five years to ten years before you make that major purchase. Number one, does purchasing a home contribute to my family's stability or not? Because if you purchase a home and you can't hack it and you can't make the bills, then you're going to be pulling your kids out of school, you're going to be moving them around, and one of the worst things that you can do to your family is move them around too much in their formative years.

2. Does the Purchase Make Financial Sense?

Secondly, does the purchase of this home make financial sense? Is it better to rent or to buy in the area that I live in? Are the options that are being availed to me, whether it be from Islamic or conventional mortgage companies, do they make financial sense? Am I being overcharged for something?

Now, there's a very interesting principle that Shaykh al-Islam Ibn Taymiyyah mentions, one of the Hanbali scholars of the 8th century, who he says that it is impossible for Allah to allow something for you that is worse than what He forbade.

So, everyone, alcohol? Toxic, you know, whiskey. Everyone's silent. It's okay? No. So, drinking whiskey is not allowed. We can all agree? Cocaine, not mentioned in the Qur'an. Why is it worse? Why is it haram? Because not only does it have the effect of an intoxicant, but worse. The only thing mentioned in the

Qur'an is wine, but why was wine mentioned? Because it's the floor, and everything above that that's worse that is also forbidden.

Let me give you a different example to drive it home. Allah says:

"And do not say to your parents 'uff' and do not repel them" (Quran 17:23). Your mom and dad are talking, don't do that. That's something that's not allowed for us to do as Muslims. Does that mean that if your mom says something that you don't like, you don't go 'uff', you just smack her? Of course not. Because that's the floor, and anything that's worse than going 'uff' to your mom, is also forbidden.

So, Ibn Taymiyyah says here, it's impossible for Allah to allow something which is worse than that thing that He has forbidden. So when you're going into a contract or a deal which has less consumer protections, costs you more money, and exposes you to more risks, is it really that much more halal? Is it just the name that's being used? Or is it the function of the contract which is important?

So does this make financial sense for me and my family? Can I afford it? Am I overextending my credit worthiness? And does the deal actually make sense?

3. Are You Willing to Stand Before Allah on the Day of Judgment?

And then lastly, and I can't reiterate this one enough, are you willing, or should I say, am I willing, to stand in front of Allah on the Day of Judgment with the decision that I've made? It's a hard question.

Allah's slave, one of us, will be brought on the Day of - يُؤْتَى بِالعَبدِ يَومَ القِيَامَةِ فَيُضَرَبْ عَلَيْهِ بِكَنَفٍ Judgment and a canopy will be placed over him." Why? No other distractions. Allah will speak to him. There will be no translator between him and Allah. And he will say:

"My slave, my servant, you did such and such on such and such day." The only thing one of us will be able to respond is, "Yes, Lord, I admit it. Yes, Lord, I admit it."

And then Allah will say: - لَقَد سَتَرتُهَا عَلَيكَ فِي الدُّنْيَا وَإِنِّي أَغْفِرُهَا لَكَ اليَومَ "I hid that from the people in the previous life, and I forgive you of those sins on this day" (Bukhari 2441). May each and every one of us be that person.

But we have to be ready to stand there because I won't be able to come. You can't say, I asked Joe Bradford about this and he said yes. And then on the day of judgment you go, Joe, where are you? I can't find you. Sheikh Ahsan, you brought Joe. Where is Sheikh Ahsan? And me and Sheikh Ahsan are running like Carl Lewis away from you on the day of judgment.

The day when one of you - يَومَ يَفِرُّ المَرءُ مِن أَخِيهِ وَأُمِّهِ وَأَبِيهِ وَصَاحِبَتِهِ وَبَنِيهِ لِكُلِّ امرئٍ مِنهُم يَومَئِذٍ شَأْنٌ يُعْنِيهِ will flee from his mother and father, his brother and his children, his wife, his progeny. Everyone will be concerned with themselves on that day" (Quran 80:34-37).

So none of us will be able to stand there and answer for the actions of other people. So we have to make informed, educated, ethical decisions. Meaning that, regardless of whether I go with an Islamic mortgage company or a conventional mortgage company, I have to be able to stand in front of my Lord on the day of judgment and say, I made this decision because you obliged me, you mandated that I care for my wife and I care for my children and these were the options available to me. I chose the one that I thought would diminish the most harm and bring about the most benefit. You have to be ready to take that responsibility.

Otherwise, you'll get yourself into situations like that friend of mine that bought all that stock in the oil and gas company and then lose your shirt. Lose your house, lose everything that is there.

Now, those three decisions are things that take a lot of contemplation with each and every one of us. And the reason why it's difficult to go into the details of structuring of mortgage contracts here is because it would take about four or five hours to do all the details and all the different structures and how they're done. And all of the things that go before you get to the structuring and all of the things that happen after you sign.

But if you want more information, I did a three-hour seminar on my website that is available. You go to joebradford.net, you can get the three-hour seminar with all of the juicy details that are there. But suffice it to say, if it doesn't make your family more stable and it doesn't make financial sense and you're not educated or informed enough to make that decision, then invest the time in order to understand what it is you are getting yourself into.

Protecting Wealth

Lastly, we want to talk about protecting wealth. And one of the ways that I find is easy to make these type of decisions and facilitates good decision-making or good choices in the decisions that I'm faced with is something that I got from my good friend Idris Bello, who's an entrepreneur from Nigeria, and a good friend of mine and a mentor. And it is by forming a personal board of directors. And you ask that personal board of directors any time something comes up.

So I have a CPA. He's on my personal board of directors. I have an entrepreneur. He's on my personal board of directors. I have a sheikh. He's on my personal board of directors. I have an elder. He's on my personal board of directors. I have a peer. He's on my personal board of directors. I have a wife. She's on my personal board of directors.

Take advice from those people that can help you work through these issues.

Financial and Life Planning

Financial planning is one part or one thing that you can do to protect the wealth that you have, whether that means that you start with something as simple as that homework assignment that I gave each of you

of understanding your ideal day versus your actual day, and then from there, what depends on money and what doesn't, and then number two, creating a budget. Those are basic things that you can do to get things in order.

But financial planning, and in fact something called life planning, is very important, where you're thinking ahead 5, 10, 15, 20 years about what's going to happen. You can't imagine the number of people that come up to me and they say, I need to pay for my children to go to college. I say, okay, how old are your kids? They're 17. They graduate in three months. Okay, how long have you been working at your job? Well, alhamdulillah, I've had a job for 20 years.

So is a Chinese proverb that says the best day to plant a seed was when? 20 years ago. The second best day to plant a seed is today, and the Prophet (peace be upon him) said (لَو قَامَتِ السَّاعَةُ وَفِي يَدِ أَحَدِكُم فَسِيلَةٌ فَلْيَغْرِسْهَا - If the Day of Judgment started and one of you was planting a sapling, planting a small tree, he shouldn't stand up until he's finished planting it) (Ahmad 12902).

So take the initiative to discover what's going on in your financial life, your overall financial health, and make a plan.

Estate Planning

And then in addition to financial planning and just knowing the numbers, there's something called estate planning. And estate planning means that you have a few essential documents that are key to protecting you and your values and decisions. And all of that money that you've accumulated over the years, if you have a will that basically would designate who gets what and when and how, you can have a medical directive or some call it a health care surrogate, which essentially gives guidance to your doctors on how you as a Muslim want to be treated if you are incapacitated and how they should communicate to your family in that.

It will address major issues. One of the most difficult tasks or decisions for a family to make is whether there should be a do not resuscitate order on someone who's struggling. And it is. I've worked on several cases where no instructions were left and families were struggling to make that decision. So having a health care surrogate or medical directive can help you with that.

Having the power of attorney that would allow family members or trusted friends or business partners to make decisions for you when you are unable, whether incapacitated or have passed away. And having a family declaration that would essentially set out and give your family the guidance that they need in a difficult time.

If you can have those four documents, then it's extremely important. Those four documents, it's extremely important to do so. Now, you can get those in one of two ways, main two ways. Either speak to an attorney and they will draft up for you a suite of documents and sign those.

Now, there's two issues that come up with that. Many attorneys may not have the requisite knowledge of what reflects your values as a Muslim. And the laws of inheritance and the rules of inheritance and the particulars of your personal situation with regards to that. And then secondly, those who do provide those type of services and label them as Islamic can many times be very expensive.

And quite frankly, 85% of us in the Muslim community don't need large, complicated trust structures. We don't need huge, you know, AB trusts and pour-over wills. We need basic protection. That basic protection can come through a basic will.

Now, you might say to yourself, I don't have any money. I don't have anything that could be inherited. The Prophet (peace be upon him) in Sahih al-Bukhari, he said, (مَا حَقٌّ امرِئٍ مُسْلِمٍ لَهُ شَيْءٌ يُوصِي فيه تبيت ليلتين إلاّ وَوَصِيَّتُهُ مَكْتُوبَةٌ عِندَهُ - No Muslim who has something that he can will should sleep for two nights except that his will is written with him) (Bukhari 2738).

Now, what does that mean? That means that it is an imperative for us to take care of this obligation quickly. And you may say to yourself, I don't have anything that I can leave to anyone. Do you have a body? If all you have is a body, then if you don't have a will, guess what happens? If there's no one there to care for you, then your body will probably sit in the morgue for weeks. And I've seen this happen in several cities.

There was no next of kin. No one from the community was given the ability to claim the body. So a Muslim body is sitting in the morgue without a funeral, just sitting on a shelf waiting for something to happen. It causes undue stress on the community and undue stress on the delay of your burial.

I know a particular case where a man had family but nobody knew about it. And he passed away. And so the city held his body for a while and then eventually, through negotiation of his employer, who was a Muslim, and the Islamic Society, they released the body and they buried it. Two weeks later, his family shows up from some podunk little town in the middle of Texas and says, we're suing the city, we're suing the mosque, we're suing the employer because you released it to other than his next of kin.

So having a will will guarantee that you have a proper burial and a proper funeral. If you have children, even if you're not leaving anything to them, you can at least leave them in the proper hands. You can leave them in the care of those who you want to care for them, not the care of who a judge decides for you. Because if you don't have these documents, then a state judge will decide what happens to your money, what happens to your kid, what happens to your body. So it takes responsibility on our part.

MyWaseya - Islamic Will Service

So you can go to a lawyer or you can go and use a service called MyWaseya. That's M-Y-W-A-S-E-Y-A-H.com. And as a full disclosure, I am a partner at MyWaseya.

And the reason why we created this, think of it as a LegalZoom for Muslims, is because so many people would come to me and say, I need a will, I need you to help me. And it became uneconomic for me to devote so much time to something that most people wouldn't be able to pay for if I were to bill it hourly. And lawyers that I know don't want to do those type of wills because when they do large estate planning packages, they're usually doing them for thousands and thousands of dollars.

So myself and a lawyer who coincidentally also practices here in Southern California but is also in other states, we said to ourselves, let's create an economic, Sharia-compliant, legally valid will in all 50 states. You go to the website, you put in your name, your address, the state that you live in, and then you answer questions about yourself, your family, your property, what you want to do with gifts after you die. Do you want to leave a third or less to whoever?

And then algorithmically, in the background, we worked with a developer who created an algorithm that will then create a custom will. It's not a fill-in-the-blank template. It creates a custom will according to your needs and the state that you live in and the situations that you answer. And we say it's not a one-size-fits-all product, but it's a one-size-fits-most product.

If you need more complicated estate planning documents, please go and get them. Speak to somebody that's qualified. Have those drafted up. But if you don't have a net worth of about $5 million or more, then for now, the basic will is sufficient.

So having an estate plan and planning for the next life is extremely important.

The Importance of Communication

And I'll leave you with this when we talk about protecting wealth. 70% of people who earn lots of money in their life, that money is gone by the time their grandchildren are born. And out of those people, the remaining that don't deplete that wealth, 90% of those people have lost all that wealth by the time the great-grandchildren are born. And you know what the number one cause of that is? Lack of communication.

In our community, we don't like to talk about this. We don't like to talk about money with our wives. We don't like to talk about money with our husbands. We're not open and honest about what we're earning, what we're spending, and what will happen after it goes.

So we're living in a home that costs half a million dollars, and we have a yearly budget of $150,000, and we don't let anybody know. And then suddenly, we die. And our wife goes from paying all of the bills from what we were earning to getting by on food stamps because we were not open and honest with our spouses about where we are and where we're going and where we'll end up.

So it's extremely important. If we want to protect the greatest wealth that we have (يَا أَيُّهَا الَّذِينَ آمَنُوا قُوا أَنفُسَكُم وَأَهْلِيكُم نَارًا - O you who believe, save yourselves and your families from the Hellfire) (Quran

66:6). The greatest wealth that we have after the wealth of Iman is the wealth of having a good family and children. And if we don't make the plans to do that regardless of whether we say this is halal and this is haram, then we have been irresponsible with what we've been given.

Closing

May Allah bless each and every one of us to be able to earn a halal living, to be able to protect that halal living, and to be able to be responsible in the management of those resources that He has entrusted us with. And to bless each and every one of us to hear the best of what was said and to act accordingly.

And if I've said anything correct, then it's from Allah alone. If I've said anything incorrect, then it's from me and from Shaitan. And I ask you to overlook any shortcomings and I'll be happy to take your questions. JazakAllah khair.

Q&A Session

Question 1: Home Financing Companies

Question: Lately I've been doing a lot of research about finding funding for the homes. And I found a lot of banks that they can lend money. But I'm not sure which one is really reliable. Like I found like Riba, Agnes, and there's a lot of other ones. So I just want to make sure how do I go about which one I should go with.

Answer: So the question was about the companies that fund home purchases. And while I don't endorse any particular company and I will say that through my own personal research, I have my own kind of legal Islamic legal and ethical issues with each of the companies that is out there. I don't think that there's any product that's particularly perfect.

American Muslim Jurist Association, AMJA, they wrote a white paper that talked about all of the different companies out there. And I think that for the layman, for the average person, that's a good starting point. Although just speaking openly, I have my own reservations about it.

And because my research, I have not come to a conclusion, I can't give a conclusion or say yay or nay to any company. And the reason being is this. I have been collecting all of the particular contracts and IRS bulletins and SEC disclosures and IRS disclosures, any other documentation that relates to purchasing a home.

And I've got about 2,000 pages right now between Fannie Mae and Freddie Mac documentation, between standardized state documents and the state laws that go into that. And if we didn't know that, you know, mortgages in California are done very different than they are in Texas. And they're very different than other states.

Question 2: Life Insurance

Question: What are your thoughts on life insurance? Keeping in mind that there's medical insurance, and home insurance, and other type of insurances. There's a misconception that life insurance is based on... Some scholars have said it's actually not life insurance. It's financial stability insurance. What are your thoughts?

Answer: That's a great question. And it's one that I think this is... And I'm not exaggerating. This is maybe the 10th time since I arrived on Thursday night that I've been asked this question, either in private or public.

I'm going to be completely honest with you. I am still doing a lot of reading on insurance to wrap my head around the topic, and to understand all of the structures. But I do agree that some of the substantiations against... That people use against life insurance are semantics. Oh, you can't insure a life because we have to have reliance upon Allah. That's not legal analysis, neither under the law or in Islamic law. The common law or Islamic law.

And you're correct that it is essentially financial stability insurance. So what I tell people right now is, in general, in the insurance industry, your options are very few. Because number one, it's a highly regulated industry. And number two, the contracts generally are contracts of adhesion, where you don't get a lot of choices in what to do, especially in certain types of insurance more than others.

Therefore, what I tell people is, if you are going to use or get an insurance policy, then you need to make sure that, number one, it is a mutual insurance company, which would be better than a commercial insurance company. Why? Because a commercial insurance company is seeking profit for its shareholders. Whereas a mutual insurance company, it's like a credit union for insurance, where the policyholder is also an owner of the company.

That's why when you have a company like MetLife or Mutual of Omaha, there are several others. When you have policies with them, at the end of the year, sometimes they'll actually give you a refund on your policies, or they'll credit you for the coming year. Why? Because that's your money that's coming back to you. So use a mutual insurance company.

And then number two, make sure that that company has a clear corporate social responsibility charter. And corporate social responsibility essentially means that they're going to invest the insurance pool in companies that are socially responsible. Now, corporate social responsibility charters do not match one-on-one with Sharia-compliant charters.

However, they are very close. And there's actually a very interesting study that was done recently comparing them for different industries and different companies. And I would say that if you can do those two things, then you've diminished a lot of the objectionable components of what people talk about insurance.

Because there's agreement amongst Muslim scholars that mutual insurance companies are allowed. And there's a difference about commercial insurance companies. And within that mutual insurance company, then you have two things to consider. And that is how they manage the company and what they invest in. How they manage the company is generally up to the regulators. So it's out of our hands. But what they invest in is up to them.

And therefore, I say, until we have a viable solution other than what's out there, then we should look and actually encourage these companies to have CSR, corporate social responsibility charters, and make better decisions that in the long run will benefit not only them, but it will benefit society as a whole.

Question 3: Tax Benefits and High-End Houses

Question: A lot of people buy very high-end houses to get, you know, people who earn a lot of money, they need a tax break. So that's the reason they need to, you know, like somehow, from like a shelter. So what should we do in that case? You know, like people, like some people have to pay like 60% in the taxes. So more than half of the money goes into the tax. And that is one way, you know, when you buy a high-end house, when you pay your interest, that is deducted. What should one do in that case?

Answer: Well, I think that that's a decision that has to be made, you know, in conjunction with a person's tax planner, financial planner, their CPA. You know, if somebody's earning that much, they should probably have a tax attorney as well.

And I would caution them from overextending themselves and the need for that house because if things do go bust, then that's a huge liability. And to look to other things that are investments or charity that they can, you know, get a tax deduction from as well. I can't comment on a specific case, but I would just caution going down that road without having consulting experts.

And Allah says, (فَاسْأَلُوا أَهْلَ الذِّكْرِ إِنْ كُنْتُمْ لَا تَعْلَمُونَ - fas'alū ahla al-dhikri in kuntum lā taʿlamūn) - "Ask the people of specialization, of knowledge of that, if you don't know" (Quran 16:43). Allah knows best.

Question 4: Insurance and Necessity Assessment

Question: Basic, in the most basic sense, and I don't have much knowledge about it, but in the most basic sense, is insurance an unequal exchange of money, making it somewhat impermissible? And the second follow-up question is, you touched upon necessity, like in terms of buying a house. A lot depends on what your necessity is, and it depends on case-to-case basis. So if I was to analyze my situation and see, okay, is buying a house a *darura* for me or not? You know, the technical term that they use. How would I go about assessing that in complying with Islamic laws?

Answer: How would one assess what is essentially a necessity for them or not? And that's going to be by looking at not only your personal situation, the needs of your family, the plans that you have for your family in the long run, but also whether that your needs are consistently present or they're one-time.

So for example, somebody may need to purchase a house because they need to place their family in a good zip code so they can go to good schools, because in the long run, that's the only way that their children are going to go ahead or get ahead in life. And if we were to bar them from doing so, that's what they call that an incessant, consistent need is treated as a dire necessity.

So if that need is long-running, is going to be there for a long time and is consistent, then it's basically ranked up to the level of a necessity. And it's going to differ from person to person. But in general, you're going to weigh the benefits and the harms, and then you're going to look at kind of the tenure of what you're dealing with in life and whether that does get up to the point of you having to do that or not.

If a necessity generally is that thing which is that if it is not present in your life, it will cause some major detriment to the stability of your life and that of your family. And as a head of household, you have to take into consideration that you're not making a decision only for yourself, but also for your family and maybe your extended family as well if you're caring for your parents.

So taking all of that into consideration and how your decisions affect their life, then that's where you're going to get to the point of understanding whether it's a necessity or not. And I do understand that that is kind of malleable, but again, that's really all that can be said on a case-by-case basis. But I think that in this case, it's important to take advice from people and kind of bounce ideas off of others so that you can really understand your situation in life.

Going back to your question about insurance, what you mentioned describes commercial insurance, but mutual insurance is essentially me agreeing that I will cover your costs and you cover mine. So it's like me saying to you, hey, do you want to go to dinner? And then you go, yeah, sure. And then you say, well, I can't cover everything. Oh, no worry, I'll pick up part of the bill now. You get part of the bill later.

And we didn't go for a dollar-for-dollar amount, but because we are in agreement with each other that we'll cover each other's costs, then we forgive any excesses that come there. And anything that was surplus, we distribute it amongst ourselves. That is completely fine.

Question 5: Husband Not Supporting Wife

Question: A sister was asking if a man has enough money to provide for his family and spends it on others who also are in a stable condition and he doesn't spend or give his wife money and doesn't trust her, but he pressurizes her to work and earn money, is it permissible for him to tell her to earn while he's stable?

Answer: So it is not permissible for him to do so. The base understanding of marriage is that the man is expected to care for his family.

Now, if he is unable to care for his family because of a shortfall in income or because his wife has aspirations and he's going to stay and care for the family, then that's negotiated at that time. However, if he is well able to earn and to support the family, then he has the obligation to support his wife and his kids.

The Prophet (peace be upon him), he said, that the upper hand is better than the lower hand, but begin with those that are dependent upon you.

So our first and foremost priority is to our families and caring for our families, which is why when we pay zakat, our zakat is paid out of what? 2.5% of what? Savings after expenses, after one year. Notice, 2.5%. After expenses, after a year. Care for your family for the year. Then whatever is left after that.

I went to a community college one time to speak about Islam and I spoke about five pillars of Islam. We talked about zakat. And this young lady in the crowd, she got really cocky. She said, you know, we tithe at my church and we give 10% of everything that we have gross, not net, not after, gross to the church. We got a coffee shop and a bowling alley. We got all this kind of stuff.

And I said, how many poor people do you have in your church? Oh, we have a lot. I said, well, imagine this. Imagine if each one of us, instead of giving charity, cared for our brothers and our sisters, blood relatives, and cared for our mothers and our fathers and our grandmothers and our grandfathers and our grandchildren, and then our uncles and our aunts and then those who are our neighbors. And then, after the year, after we've cared for, taken care of our family and then all of those around us, we had a little bit left over, and we gave that to the poor. How many poor people would really be around? There would be very little.

Because zakat not only purifies our wealth, but it strengthens our family and our social bonds. So it's extremely important, in the case that the sister was asking about, to know that it's wrong for a husband to

do that. It's wrong for you to force your wife to work when she doesn't need to and when you have the ability to care.

Now, if she wants to work and the family comes to an agreement for that and there's no one suffering in the family from child care and things like that, then she works, but that money is hers. She's under no obligation to support you. If she does, she's allowed.

The wife of Abdullah was very rich and he was very poor. To the point where she went to the Prophet and said, Abdullah is so poor, can I give him zakat? And he said, yes, you can. Why? Because she's under no obligation to care for him and he's under obligation to care for her.

So the principle is, take care of those that are dependent upon you. May Allah bless the brother to come to that realization and give the sister the requisite strength and patience to make it through that situation.

Question 6: 401k and IRA Accounts

Question: I just have one question. I'm not very well versed with IRA accounts and 401k. But one of the reasons I got out of that because listening to several scholars around, I was kind of informed that by nature, even if you invest in technology companies or any kind of halal companies, but by nature, the way these accounts are handled, there's a lot of interest involved, which is impermissible. So what is your opinion about that?

Answer: So I'll tell you that that's not the case with all companies. And I'll give you the Cliff Notes version of how to deal with your 401k and IRA. A lot of people ask this question.

The assumption that all companies deal with interest is incorrect. In fact, I can tell you, having worked in equities analysis, that there are companies that have zero interest. Zero interest income, zero interest expense, meaning that they are so well established that they have no need to take out a loan. Their name is enough of a loan.

A company like Microsoft doesn't need a loan. Bill Gates writes a check if they ever needed it, which they don't. You have companies that do steel, lumber, basic industries. They've been in the country for 160 years or longer. Their name is enough of a loan. They don't need to go to the bank. They're good for it. So investing in those is unquestionably allowed.

So what I tell people is, with your 401k, first of all, you need to ask if you can do an SDA, a self-directed account. If you can do a self-directed account, then you're giving control over what's invested in your 401k. Now, your IRA is something that you set up, so you already have control over it.

So now you're thinking to yourself, I don't know what to do, so what do I do? You can do one of two things. You can sign an agency agreement with a money manager who will then invest for you, like Sharia

Question 7: Conventional vs Islamic Finance

Question: I have a couple of questions. The first one is about the, you know, you mentioned about being able to stand up in Yawm al-Qiyamah. But individually to reach that level and, you know, overcoming the ignorance is very difficult, right? One has to be mujtahid to make the decision whether certain things are right or certain things are wrong. So we need our ulema to tell us that this is, you know, not just the guideline, but specific, right?

Answer: So no, I don't, I'm not saying that I approve of all conventional mortgages. And the reason being is that all conventional mortgages aren't the same. Mortgage that are offered by large national mortgage companies are different than portfolio loans that are offered by regional and local banks. State to state mortgages are different.

What I'm saying is that not enough research has been done by others or by myself that I can confidently in good faith tell you, yes, you are doing something which is unequivocally impermissible. I can't take that responsibility because I haven't done the research or finished the research yet. So I'm not placing myself in that position to take that responsibility in front of Allah.

But my message is is to be very cautious regardless of whether it's conventional or it's Islamic. And the real danger in our community is selling us on names and not selling us on substance. Now some people say, oh, don't worry about any of the Islamic ones. Conventional is the way to go. That's selling us on names. That's not the substance.

Or, oh, this is murabaha or ijara or musharaka or whatever the other Arabic terms which are just names for contracts from medieval Islamic law that may be valid or invalid based upon what? The substance.

Question 8: Credit Cards

Question: So my question is in regards to credit cards. I thought the reason why we don't use credit cards is because of interest. So I don't really understand how we're allowed to finance a home because technically we're using some type of interest. So can you clarify that? And with credit cards, if there's zero interest, are we allowed to use them as well?

Answer: I think you bring up an important point. And that is that when we say finance, the way that you finance different things is different, completely different, depending upon the industry and the area that you're financing.

So I'll give you an example. Financing a new car is done completely different than financing a used car. Completely different than financing an owner, someone selling you their own car. Completely different than how homes are financed. Completely different than how large-scale mixed-use commercial real estate is financed.

But they're all called finance. And they may or may not have something called interest mentioned. And interest is an accounting term. And it is anything which is above and beyond capital. So interest is not always synonymous with the Arabic word riba, which is forbidden for us, which is cash on cash, cash now for more cash later, whether at contract or at default.

So with a credit card, is it allowed to have credit or not? The Prophet (peace be upon him) would borrow from people and pay them back. So it's allowed to take credit from people. What's impermissible is to charge on top of that credit for delinquency, for default, because you're essentially charging money on money. Because if it's a debt, you're taking more money.

That's different than the way that a home is financed. Why? Because mortgages, regardless of the structure, Islamic or conventional, if I say to Sheikh Ahsan, Sheikh Ahsan, can I borrow $300,000 from you? And he says, sure. What do you want to do with it? And I say, I want to buy a home.

We're talking about in Islamic law, a loan under Islamic law. And he says, sure. What do you want to do with it? And I say, I want to buy a home. He says, mashallah, that's great. Here, I'll loan you $300,000. And he gives me the cash. I say, okay, I'm liable to you for what? $300,000. Psych, I'm going to buy a Bentley. And I go and I buy a Bentley.

Does he have any recourse to stop me from buying the Bentley? No, he doesn't. Why? Because I'm liable to him only for the cash value that I took from him. But when I buy a home, what happens? Or when I want to buy a home, what happens?

I identify the home. I find the mortgage company. I go through my credit check. And then myself, the buyer, the homeowner, the seller or the builder. And the mortgage company, where do we all go? To the title company. To the escrow company. I put my earnest money and my down payment into escrow. The mortgage company transfers the remainder into escrow. The homeowner or the builder puts the title into escrow.

And nobody does anything until all three parties are agreed and they sign. I never see the $300,000 that I get from the mortgage company. I never touch it. I never have access to it. It's only used for purchasing the home. And I say that because, and I'm mentioning this point because that means that it's different than a cash-on-cash loan.

So, is it a loan? Is it a partnership? Is it a sale? Is it an agency agreement? Is it all of those? Is it none of those? Is it a quasi-contract? What's the role of Fannie Mae and Freddie Mac that you mentioned or someone else mentioned earlier on coming in there and funding the secondary market for those, underwriting the mortgage industry?

These are all very complex issues that all play into the halal and the haram of these issues. So, there are fundamental differences in the way that credit cards work and the way that mortgages work. One of them would be cash on a debt or profit off of a debt. And the other one would be a secured loan or a secured funding for the purchase of a house. So, it would be different.

Now, how can a person have a credit card even though there is a condition for interest in that credit card? This is a very classical debate amongst Muslim jurists, one in which they say, or they ask the question, does an invalid condition invalidate the contract or just that condition?

Does an invalid condition invalidate the contract as a whole, meaning you put this condition in a contract? No good. Start over. Or do you just X out that condition and allow the contract to go forward? Perhaps the stronger of the two opinions is that it does not invalidate the contract.

The reason being is because you can have, you know, you can have separability in a contract. You can exclude portions of that contract and apply for portions of that contract. And during the life of the Prophet (peace be upon him), there was a woman whose name was Barirah.

And Barirah was a slave. And the people that owned her, now remember, we're talking about 7th century Arabia, we're talking about the medieval period. Now, the people that owned her said, we will allow you to buy your freedom from us. So go and find money to do so.

So she went to Aisha (may Allah be pleased with her), the mother of the believers. Can you help me? Because I don't want to be in this situation. And Aisha, knowing that Islam calls for the freeing of slaves and taking people out of the servitude to man into the servitude of Allah, said, yes, I will help you. I have the money for you.

She said, but there's a problem. Step back in your mind a minute. We're talking about medieval societies where if you were an individual that didn't have a tribe or a large family, you were generally left on your own. You were prey for the predators out there.

So what would they do when a person would be freed from slavery or a person would accept Islam or a person was an orphan? They would take that person into the family and give them allegiance, wala, meaning that if we don't ever find any of your family members, then you inherit from us and we inherit from you and we treat each other like family.

So that family that owned her, they said, sure, let Aisha pay for her, pay for your freedom, but we get your allegiance. You continue to be our family. So the Prophet (peace be upon him), when he was asked what should she do, he told Aisha

(Source Name)

"Free her and give them the condition that they want. Which condition? The invalid condition because"

(Source Name)

"every condition that's not found in Allah's law is invalid, even if it's a hundred conditions" (Bukhari 2168).

He then went on the mimbar later that day and he said, what is wrong with people stipulating conditions that are not found in Allah's law? Any condition stipulated in Allah's law is invalid even if it's a hundred conditions. Meaning that the contract for her freedom was not invalidated by the presence of an invalid condition.

Therefore, borrowing from someone or taking credit from someone is not invalidated by them stipulating that you pay interest on a debt. Now what does that mean for us? We don't have the ability to stop them from charging interest. So you have to do two things.

Number one is never spend beyond your means. Spend only what you can pay for in cash. That means don't roll over your monthly amounts. Too many people make that mistake. Oh, they're just charging me a fee. They're not charging me interest. No, that fee is the interest rate.

Now let's say for example you're a couple of days late. Don't just leave it there. Write them a nice email. I've been a customer with you or I've held your credit card since 1992 and I wanted to kindly request you to remove the fees that were added to my account recently. And most of the time, they'll wipe them away.

Because credit cards earn their money from three things. They earn their money from what they call intrabank transfers, intrabank fees. And they earn their money from point-of-sale fees. And they earn their money from late fees. The late fees are actually the least thing that they earn their money from.

They earn more money from charging point-of-sale, from charging businesses that use credit card machines than they do from late fees. And they earn more money from intrabank fees, the banks saying, okay, it's like a toll road. You can pass by and you can pass by. They earn more money from that.

And I'm going to add this to it. You didn't ask it. But this is a bonus. When you get credit card rewards, you are not taking interest. You are not taking Riba. When you take a credit card reward, you are being rebated the amount that was going to go to the point-of-sale that you're using.

So let's say you go to Walmart and you spend $100. And they take 3% from Walmart for every transaction. How much is that? $3. So your credit card company says, if you shop at Walmart, we'll give you $1 back for every transaction. So that means instead of Walmart getting $3, they're going to get $2 and you get $1 back.

So you're being refunded what would have went to the point-of-sale. So it's essentially a refund on your money or a commission on using that service and there's no problem for you to take it. Allah knows best.

Question 9: Stock Trading as Business

Question: What about business that actually use money directly as a business inventory, instead of, like, Amazon have money buying stuff, and as a retail guy selling it back, you know, eBay dropship or whatnot. What if it's just like trading stocks? You know, money is basically the business inventory. Not in the sense of investment or slash saving, but it's more like it's a way to make money. And if you could, like, shed some light, especially in light of, you know, the riba in the Quran, that Allah will wage war against riba, and then in a hadith that says, like, the best way to make money is from hands, or something like that.

Answer: When you are trading stocks, you are not making money with money. You are making money with your ownership portion of the company that you bought. So, when you buy a stock, or a share, it is your ownership share of the company that you just bought into.

So, if Apple has issued, you know, a billion shares, and I own one share of Apple, I own one one-billionth of that company. Now, I don't own enough of the company to make management decisions, but I do own enough of the company that when the company makes money, they're going to pay me. And that's what's called a dividend.

And so, as long as I'm holding that stock, I have the right to the profits of the company, which is a dividend. A company like Apple actually pays good dividends. A company like Amazon doesn't, because Jeff Bezos is always pouring all the money back into, you know, things like the Fire Phone and all these other projects and things like that.

So, there's no problem with trading stocks. Like we said, you have to vet the type of company that it is, and then vet the financials to make sure that they're straight. And that is a type of trade.

And now, I will say this, and as a businessman, I don't just talk about this stuff because I think it's interesting, but I do business. I do trade. I've traded stocks. I've done currencies in the past. I do real estate development. I've worked in fixed income. I've worked in corporate finance. I've worked in conventional financial institutions. I've worked in Islamic financial institutions, all with the intention of learning firsthand what this stuff is about.

Because I was always frustrated about people that would talk about it without having, and even one of my teachers used to say, you're never going to know this until you take a grand and put it in the market and see what it does. You will then understand how it works.

So I actually think that there's more money to be made doing product flips and drop shipping and things like that through eBay and Amazon and all the other, than there is in the stock market. And I tell people all the time, I've made dollars on my pennies through trading merchandise, and I've made pennies on my dollars through the stock market.

And that's just my personal results. I'm not saying that I'm rich, but there's a small residual income that comes month to month from these types of trades that if a person could really amp it up, they could suffice. And that's why I said, if you're low on income and savings, the two H's, halal, hustle. Find a product that's halal, and hustle to buy it and sell it. Revolve that money back and forth and build up capital.

Final Remarks and Contact Information

I'm going to thank everybody for coming out tonight. I know that you may have more questions, and I do want to answer them. And I'm going to tell you how I can answer them.

Go to my website, joebradford.net - J-O-E-B-R-A-D-F-O-R-D dot N-E-T. At the top right-hand corner, you will see a button that says Contact. Click that. You will have to do two things, put in your name and your address. You'll get a welcome email.

Do not respond to that welcome email, because it is an automated email, and it will never see the response. In that email, it will say, Do you want to invite Joe to speak? I'd be glad to come and see you guys again. Do you want to ask him a question? Do you want his financial planning services?

Click the one that says, I want to ask him a question. It will take you to a form. Fill out your name, email, the question. It will send an email to my assistant, who puts all of those questions together and gives them to me every two weeks.

Then what do we do? We take those questions, we answer them on a YouTube video, we send that YouTube video out to everybody whose email that we have. Nice process, makes it simple so that I don't miss your questions. And it can also combine many questions that are the same.

And so, because that service exists, I do ask you to not pull me to the side while I'm walking out of the masjid and make the walk from here to there a half an hour to 45 minutes.

JazakAllah khair. May Allah bless each and every one of us and thank you for inviting me and I hope to see you again. Assalamualaikum.