My Path to Becoming Riba-Free: Leveraging Community to Pay Off Debt with a Halal Loan Alternative

Debt can feel like a weight that holds you back, making every step forward in life seem harder than it should be. For many Muslims, including myself, the burden of debt is compounded by the need to avoid riba (interest), which is explicitly prohibited in Islam. As I embarked on the journey to clear my debts, totaling €70,000, I realized this would be a challenge that would require both strategy and support. What followed was an exploration of a Halal loan alternative that helped me make significant progress while staying true to my faith.

The Wake-Up Call: Realizing the Need for Change

As I started to take a more serious interest in clearing my debt, I quickly came to understand that it would not be as easy as I had initially hoped. Seventy thousand euros is not an amount you can clear in a year or two without significant sacrifices. However, I was determined not to let this debt linger for the next decade of my life. It was during a dinner conversation with my wife that I decided to ask for her help. With a deep breath, I explained my situation and asked if she would be willing to assist me in clearing my debt faster. Alhamdulilah, she agreed to help. May Allah reward her for her kindness and support. Her willingness to contribute gave me renewed hope and the determination to find a viable path forward.

Discovering Kamiti: A Community-Based Halal Loan Alternative

With my wife’s support, I began exploring different methods that could help us clear the debt more quickly. Being from a South Asian background, I was familiar with a concept known as "Kamiti" (derived from the word "committee"). This method, popular in many cultures, is essentially a community savings pool where a group of people agrees to contribute a fixed amount each month. In our case, we gathered 13 people, each contributing €1,000 a month for 13 months. Each month, one member of the group receives the entire sum of €13,000, either through random selection or mutual agreement. This allows the recipient to access a lump sum much sooner than if they had been saving on their own. It’s a powerful tool, especially when used responsibly within a trustworthy group. You might ask, "Why not just save €1,000 a month yourself and reach the same goal?" The answer lies in human psychology. As the famous quote by Warren Buffett goes, "Do not save what is left after spending, but spend what is left after saving." When we have money easily accessible, the temptation to spend it can be overwhelming. A Kamiti forces you to set aside that money every month, knowing it will be out of reach until it’s your turn to receive the lump sum. For us, the Kamiti offered a way to pay off a significant portion of our debt much sooner than we could have on our own. Instead of paying €1,000 toward my debt each month and watching the interest accumulate, we were able to use the €13,000 from our Kamiti participation to make a substantial payment. This not only reduced the principal but also helped us avoid some of the interest that would have accrued over time.

How We Used Kamiti to Accelerate Debt Repayment

After our first successful Kamiti cycle, we decided to participate again. Since I was covering all the household expenses and my wife had enough left over from her salary to save an additional €2,000 each month, we were able to enter a second cycle without much strain on our finances. By the end of these two cycles, we had received a total of €26,000, which we immediately put toward paying off my debt. Our first priority was the debt from the UK, which carried a hefty 7% interest rate. Unfortunately, due to unfavorable exchange rates from euros to pounds, we had to pay more than anticipated, leaving us with roughly €12,000 still to clear. With the UK debt nearly paid off and the Dutch debt currently at 0% interest, we decided to take an aggressive approach. We used our remaining savings to clear the UK debt entirely. This left us without any savings, but the relief of being riba-free—at least for now—was worth the sacrifice. However, I am mindful that my debt from the Netherlands will begin accruing a 2.5% interest rate starting in January 2025. My goal is to pay off this remaining debt before the interest kicks in, Insha’Allah, so that I can continue to live riba-free. I make dua that Allah grants me the ability to achieve this goal and continue my journey toward financial freedom.

The Benefits of a Community-Based Approach

Participating in a Kamiti was a game-changer for us. Not only did it allow us to tackle the debt more quickly, but it also provided a sense of community and mutual support that is often missing in traditional financial arrangements. A Kamiti can serve as a Halal loan alternative, enabling participants to avoid riba while still accessing the funds they need for important financial obligations. If you’re struggling with debt, I highly recommend considering this method. Gather a group of trusted loved ones or friends and agree on a monthly contribution that works for everyone. It doesn’t have to be a large amount—anything from €500 to €2,000 will do, depending on what you can afford. The key is to work together, support each other, and stay disciplined. This approach not only helps you pay off debt faster but also fosters a sense of community and shared responsibility. In a world where financial burdens often feel isolating, a Kamiti reminds us that we don’t have to face these challenges alone.

Conclusion: Share Your Thoughts and Experiences

My journey to becoming riba-free has been filled with lessons, challenges, and blessings. Using a Kamiti as a Halal loan alternative has allowed me to make significant progress in clearing my debt while staying true to my Islamic values. The road ahead still has its obstacles, but with continued discipline and the support of my loved ones, I am confident that I can achieve my goal of living debt-free. Have you ever participated in a Kamiti or a similar community-based savings method? What strategies have you used to manage your finances in a way that aligns with your values? I would love to hear your thoughts and experiences in the comments below. Let’s learn from each other and continue this journey toward financial freedom together.