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April 1, 2009 > Bartering: No money down!

Bartering: No money down!

By Michelle Motoyoshi

Unless you're a bear living in a cave in Siberia, you've been touched by the current economic drama unfolding around the world. While most of us know the actions and policies of governments and financial institutions affect everyone, what concerns us on a daily basis is how we make ends meet. How can we lower expenses and still provide for our kids? Is there a way to hold on to a few of the 'extras' in our lives and still be frugal?

The answer is yes, you can, but it requires a shift in approach to your personal economy. One easy shift is to resurrect an old system of exchange: bartering.

Back before we industrialized and jumped on the capitalism bandwagon, one of the primary ways people got what they needed was to barter for it. They exchanged a product or service for one of equal value. For example, if you had lots of eggs but no cow, and I had plenty of milk but no chickens, we could trade, milk for eggs and voila! We both had what we needed.

The same thing can be done today. In fact, this is how I 'pay' for my daughter's piano lessons. I do personal training. My daughter's piano teacher wanted to start exercising to lose weight. I asked if she'd be willing to trade: one personal training session for one piano lesson. She agreed, and for nearly a year now I've been getting piano lessons without handing over a single dime.

Craigslist is full of people offering opportunities for barter. You can get an hour of massage for proofreading a thesis or exchange your unneeded crib for a stereo component. The sky is the limit. Of course, there are a few rules you should observe to ensure a mutually satisfying exchange.

The first rule: try to trade what both parties agree are equivalents. For example, in my situation, my daughter's piano lesson was $30/half hour. My personal training sessions are typically $40/hour. To make the trade equivalent, we agreed that the training session would be 45 minutes instead of an hour. In short, the simpler and more straightforward the exchange is, the less likely someone will end up feeling cheated.

The second rule: hammer out the rules ahead of time, like how long will you carry out the barter (e.g. will it be just one exchange or will you carry on indefinitely?) In my situation, we agreed on what happens if someone cancels a session. The more you make clear ahead of time, the less chance of a misunderstanding.

The third rule: if you're dealing with a long-term exchange like mine, put the rules in writing and have each party retain a copy. That way you have something to refer to should there be any questions in the future.

To get started, think about all the skills and experience you have. Consider things you haven't done in several years. If it's a desirable skill or service, dust it off and offer it up. You might be surprised what you can get for it.

Think of people who have something you want, and assess how willing they might be to barter. Again, you might be surprised at how willing they are.

Once you've done that footwork, you can present proposals to prospective barterers. It may be intimidating at first, but it could save you a great deal in the end. In these uncertain economic times, it'll be worth the effort.



Editors Note: Make sure you check with your CPA, accountant or other tax consultant to learn about and conform to income tax regulations concerning barter transactions.

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