The Benefits of Bartering, Is it Right for You?
August 12, 2015 | Your Finances
Cash, credit … or barter?
If you’re one of the many people who bartered goods or services without spending a single cent last year, then the answer to that question is a no-brainer.
In fact, the practice—whose origins date to 9000 B.C., when people traded cattle, sheep or a favorite camel for other necessities in life—has been on the upswing over the past few years.
According to Kevin Brown, CEO of Hudson Barter Exchange, the recession of the late 2000′s is what sparked the trend.
Of course, we’re not living in ancient Egypt, when you could just head to the local market and trade fresh farm eggs for a fancy scroll of papyrus.
Person-to-person bartering is still done today through swap meets and online via sites like Craigslist.
But there are also sophisticated barter exchanges located throughout the U.S.—more than 1,100, to be precise—that enable people and businesses alike to use “barter bucks” to trade goods or services for credit that they can apply to something else on the exchange.
“Although an organized barter exchange will charge some transaction fees,” explains Brown, “you get paid your prevailing retail rate for an item or service in barter bucks.”
The benefit of using an exchange, he adds, is that the onus isn’t on you to track down a specific person who has what you want—the service has a vast, built-in network.
Want to get on the barter bandwagon?
We canvassed the country and found people who’ve embraced the barter way of life, exchanging their time and talents to snag everything from travel perks to babysitting to little luxuries we could all use (hello, weekly massages!)—for free.
“I Barter a Lifetime of Skills for Little Luxuries to Keep My Retirement Budget in Check”
Yoga classes, hair appointments and massage therapy can quickly put a serious dent in a monthly budget—especially when you’re retired and living on a fixed income.
But rather than give up such luxuries, early retiree Colleen Teifer, 44, of Sunset Beach, N.C., decided to try bartering to leverage the skills she’d picked up as a high school administrator for 15 years.
After noticing that many small businesses in her area needed office support—such as accounting or social media expertise—she began offering her services for theirs.
“I went to the yoga studio, the hair salon, and got to know the owners and paid attention,” Teifer explains. “When I saw things that I thought they might need help with, I offered to help them.”
As a result of her enterprising swapping, she saves about $300 a month—money she can stretch into her future golden years.
“I Get a Break on Child Care Costs by Bartering for Babysitting”
Six years ago, when Erica Zidel, 33, needed to find someone to take care of her 3-year-old son for about four to six hours each week, she turned to a local babysitting co-op in Boston for help.
Parents within the co-op barter babysitting duties by taking turns watching each other’s kids. Depending on how much child care she received, Zidel, in turn, took care of other people’s children anywhere from 16 to 20 hours in a given month.
“I used it about once every other week. My son got to play with other kids, and I got child care from someone I really trusted—another parent,” she says. “Had I hired a sitter, it would have cost me about $1,000 per year.”
Zidel’s experience even inspired her to launch SittingAround, a site that makes it easy for parents to start their own babysitting co-ops—which she considers to be a much safer alternative to paid sitters.
“Most co-ops have, as part of the process for admitting new members, a home visit,” she explains. “During this visit, a co-op member meets the prospect in their home and ensures that the environment meets the co-op’s safety rules.”
“I Swap Eye Exams for Home Renos”
Fourteen years ago, Kim Parr, 41, an optometrist in Cortez, Colo., followed the lead of a doctor she knew and decided to barter with some of her clients when they had a home-specific service to offer—from painting to handyman work.
“It wasn’t something I did all of the time, but on occasion it made sense,” Parr says. “If the cost of glasses plus an exam is $300 retail, it might only cost me a third of that amount, but I still get $300 worth of services or product in return.”
And, luckily, she’s only had one not-so-great bartering experience.
A patient owned a flooring store and Parr just so happened to need new carpeting. Since his whole family needed eye exams, they agreed to barter.
“Unfortunately, he went out of business before we could take advantage of the full amount of the credit,” Parr says. “So if you do barter, make sure the trade happens quickly!”
“I Barter House-sitting Services—for Free Travel”
Having a flexible schedule and an income-generating property has helped open up the world for Kelly Hayes-Raitt, a 53-year-old writer loosely based in Los Angeles.
For the past seven years, she’s traded house-sitting (she’s even been asked to start cars to keep batteries charged) and pet-sitting services to be able to travel the globe—essentially free.
“I don’t get paid, and I don’t pay any expenses,” explains Hayes-Raitt, who rents out her home in L.A. and writes a column for a local weekly newspaper for income. “I’ve lived in London for two months during the Olympics; in a glorious, four-story home with panoramic views of Lake Chapala in Mexico; and in a funky country home across from a rice paddy in Langkawi, Malaysia.”
Hayes-Raitt finds clients through TrustedHousesitters, as well as word of mouth. “And I’m happy to report that I get a lot of repeat assignments,” she says.
Although she admits that it’s not always easy to be at the mercy of other people’s schedules, the benefits far outweigh the challenges. “I get to write full-time and develop a new career at mid-life—while traveling to some really great places and living as a local,” she says.
“I’ve Mastered the Bartering Art of Trading Up—Scoring Me a Car!”
When Tamio Stehrenberger, 34, of Laguna Niguel, Calif., had a set of speakers he wanted to get rid of, he decided to post it on Craigslist to see if he could find someone who wanted to do an electronics trade.
Over the next couple months, Stehrenberger ended up making a series of trades on Craigslist—each time for a higher-priced item.
It’s called “trading up” in bartering circles—and here’s how it went for Stehrenberger: He swapped the speakers for a Sony desktop computer, then the computer for a Pitster Pro 125cc pit bike, then that bike for a Kawasaki 250cc dirt bike, the second bike for a front-load washer/dryer, the appliance for a Yamaha 450cc dirt bike, the third bike for a 1971 Plymouth Satellite—and finally the Satellite for a 2004 Audi Allroad Wagon.
“At each step, I cleaned up the item and possibly did a little here and there to increase the value, but overall, it’s just about finding people who want your item more than what they have to offer,” explains Stehrenberger, who has since launched his own bartering app, MatchTrade.
Trading up happens, he says, because people value items differently. “I might have something that I don’t care about—but you could really want or need that item,” he explains. “Both parties can walk away thinking they got the better end of the deal.”
4 Bartering Rules of Thumb
Ready to take a spin at swapping goods and services yourself? Review these must-knows first, so you can can get the best bang for your bartering “buck.”
1. Research rates. If you’re offering a professional service, you already know what your standard rates are. But if you’ve never charged for your services before, then you need to land on the right price tag, based on your time and skills.
“You can’t make good trades if you don’t know the value of items or labor,” explains Pablo Solomon, 67, an expert barterer from Austin, Texas, who has swapped labor and goods for decades.
Ultimately, the best information will come from asking around to see what other people are paying for the services you want to offer. So if you want to barter accounting or clerical skills, for example, look into what local temp agencies are paying their contractors for such services.
In Stehrenberger’s experience, things that trade well are recreational vehicles (dirt bikes and boats) and electronics—although they get outdated fast, their value and usability is still high.
As for bartering sites, TimeBanks allows you to accrue time you spend offering a service. You can then “spend” the time on a service you need without having to swap for services with just one specific person.
2. Focus on value—not price. A trade doesn’t need to be between items or services of equal value in order to be fair, says Solomon.
“I am often happy to give several items I no longer want in order to get something that I do want—and other people are usually the same,” he says.
Consumer-spending expert Andrea Woroch believes that time is actually the most valuable asset when bartering. In other words, you don’t necessarily need to have a specific trade or skill or coveted item to barter—you just need to be willing to put in some hours.
For example, instead of giving a friend a wedding present, consider what services you can offer. “Offer to watch the bride and groom’s dog during their honeymoon,” Woroch suggests. “You may not dog-sit for your main profession, but it’s still something helpful you can do.”
3. Be patient—and vigilant. Finding the right match when trying to trade physical items can be time consuming. You not only have to find a person who’s willing to barter, says Stehrenberger, but you also have to have something that person wants.
So he suggests making a list and taking good photos of everything you can offer for trade before reaching out to other barterers.
“It usually takes emailing back and forth lists of everything you might want to trade, and then meeting up to check out each other’s stuff, before a barter can be made,” he says, adding that it’s also crucial to always be 100% honest about the condition of your items.
For that matter, the old adage “let the buyer beware” is especially true for bartering. When you barter through an exchange, most business owners are vetted and have a history, says Brown, but the guy you met on Craigslist isn’t.
“And please don’t trade with someone who is going to get on a ladder,” he says, “or touch your plumbing, unless they are licensed, bonded and insured!”
4. Pay the tax man. Although bartering doesn’t involve cash exchanges, you are required to pay the government on the goods and services you swap.
To learn more, review the IRS’s guide to bartering.
And to find a bartering exchange in your area, consider checking out IMS, the biggest retail barter exchange, which does trades all over the country.
LearnVest, Inc. is owned by NM Planning, LLC, a subsidiary of The Northwestern Mutual Life Insurance Company, Milwaukee, Wisconsin.