Save Money By Bartering

As we’ve noted, the tough economic times are forcing many people to look for creative ways to save money. The Wall Street Journal reports on one age-old method that’s gaining popularity:

Cash-strapped consumers and businesses are coming up with creative ways to fight higher costs. One practice gaining popularity: the ancient custom of bartering.

That’s right, before there was money, there was bartering. And it’s back, baby.

The rise of bartering for goods and services means consumers are now trading for such things as wedding services, tombstones, breast augmentation and Botox treatments. The cash-free transactions are often facilitated through the Internet and barter exchanges, which are third-party record keepers that coordinate trades between business owners.

In the past two years, membership in trade-exchange businesses has climbed 10% to 15% annually compared with 5% to 8% annual growth prior to that, says Mr. McDowell. He estimates his members do $3.8 billion to $4.3 billion in trades a year.

Obviously there are potential pitfalls to the process, but you are generally giving up something that costs you very little, such as expertise, for something that would cost a great deal more if you were to buy it outright. So with prudence, this seems like a good and viable option for saving money.

But how widespread and practical is it really? Has anyone reading this used bartering to save money and/or afford something they might not be able to purchase?

Web Barterers’ Tricks of the Trade [Wall Street Journal]
FREE MONEY FINANCE

Comments

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  1. superlayne says:

    My mom cuts a lady’s hair who cleans house for us. So, yea.

  2. atypicalxian says:

    I used to work for the IRS — they look at bartering, too.

  3. SkokieGuy says:

    I have some magic beans to trade for?

  4. reiyaku says:

    this is amazing… if anyone can provide statistics as to how wide spread it is then id be more than willing and more apt to barter

  5. MissPeacock says:

    How does one barter for a breast augmentation? (Wait, don’t answer that.) I’m not sure that I want to go to a plastic surgeon who would barter for medical services.

  6. SkokieGuy says:

    @reiyaku: Go to craigslist.com, then select For Sale, then Barter and look for yourself.

  7. I am having a lot of success with the Wimpy method. I’ll tell them I’ll gladly pay them Tuesday for whatever they have today, and then make sure I’m in the next town when Tuesday rolls around.

  8. sir_pantsalot says:

    My dad was a printer and he would do business cards for a lady and she would cut his hair. It cost hime some paper, a little time and some ink he had left over form other jobs and it only cost her time.

  9. sir_pantsalot says:

    @MissPeacock: When people get a new car, house, iphone or other new items people always ask if they can see it. After a breast augmentation is it alright to ask to see the new toys? If you are not going to show anyone then why get them in the first place.

  10. B says:

    Just don’t try batering for sex. Turns out that’s illegal.

  11. cheera says:

    @superlayne: I’d really like to be able to barter my hair services for other services, but I work 40+ hours in strange shifts already and my boss isn’t the most understanding about things of value that don’t come in dollar form, even if I’m bartering my half of the service. (I work commission at 50%)

  12. mgy says:

    @sir_pantsalot: Having watched a few MTV specials, I can speak as an expert on the subject. Yes, they show everyone.

    But ladies, please do not augment your breasts. Please, please, please.

  13. Wormfather is Wormfather says:

    Dyslexia: Spending the 60 seconds reading ‘bartering’ as ‘bartending’.

    Let me tell you this article didnt make much sense for a minute there.

  14. SkokieGuy says:

    @sir_pantsalot: You’re hanging in the wrong circles. Every woman I know who’s gotten implants is VERY proud to show em off.

    If you dare not notice or comment, the newly augemented will often specifically solicit your opinion.

    Also, generally being a gay male will entitle one to a “Don’t they feel real” request to check out the newly purchased bazooms.

  15. barty says:

    It doesn’t hurt to haggle a price at a retailer either on large ticket items.

    It used to be common place for folks to do this, but somehow people either lost the skill or some savvy retailers managed to convince people that the price tag is the lowest price available.

    On a more personal level, almost anyone with a marketable skill has probably bartered for something in their life. I’ve done it many times for lawn services, rental time in a Cessna, etc. Being handy fixing computers has its perks!

  16. battra92 says:

    @B: Especially when it’s for a gas card.

    @SkokieGuy: I’ll give you a cow for some beans.

  17. Jozef says:

    As a part-time photographer, I’ve been doing bartering for about four years. Especially family portraits are in high demand for barter, as families usually don’t want to spend money for a professional to come over, and family portraiture is not something as unique as wedding photography, where people tend to pay through their noses, assuming that the more they pay the better the pictures will turn out to be.

    Usually, I’m bartering for other services. A typical deal is something like one session of family portraits (between 5 and 8 rolls of film) for 3-4 massages. I did this with my massage therapist, and it had two advantages. First, it was indeed cheaper for both of us. Second, as no money changed hands, to taxable income was created, so we both saved an additional 30+% in marginal tax rate payments.

  18. MayorBee says:

    @B: No bartering for sex? Looks like I’m not getting married anytime soon!

  19. robocop is bleeding says:

    I need to work on my reading comprehension: when I first saw the headline, I thought it said bartending, not bartering. Jeez, I know where my mind is today.

  20. MayorBee says:

    Oh, and on topic…I’ve done computer work on the side for a used car dealership in trade for part of a payment. Probably not exactly bartering because it has a definite cash equivalent, but it was a service for (part of) a product.

  21. Wormfather is Wormfather says:

    @robocop_is_bleeding: Hey, see my comment above!

  22. speedwell (propagandist and secular snarkist) says:

    @MissPeacock: You wouldn’t go to a plastic surgeon who accepts barter? That’s pretty ignorant. If you have something the plastic surgeon needs or expects to be able to trade for something else, you may certainly barter it. In my case, I could use my secretarial skills (in both medical and insurance settings) or my graphic artist skills (for marketing purposes). Or who knows, my sewing skills to make him slipcovers for his living room furniture, curtains, or a handmade quilt or two. Or I could offer a few lockout job coupons to him to use or trade to other people for other things (since I have basic locksmith skills, ethically acquired through a locksmith study course). Your dullness amazes me, frankly.

  23. Sudonum says:

    There’s an organization in New Orleans called [www.crescentcitytrade.com] It’s a barter club, where businesses trade goods and services. Great organization with some great members.

  24. SkokieGuy says:

    @speedwell: Don’t you be calling Miss Peacock dull!

    I wouldn’t go to a Doctor who accept barter either. And exactly what recourse would you have for a botched or negligent surgery? Repo his slipcovers? Intentionally not proofread a memo?

    You don’t buy the cheapest parachute and I think there are somethings where quality needs to trump the best obtainable deal.

  25. A.W.E.S.O.M.-O says:

    @B: I never understood why you can’t trade sex for items or money, but you’re allowed to give it away for free.

  26. kc2idf says:

    I have always been willing to trade for computer consulting services. Quite frequently, when doing upgrades, I will trade the upgraded-out components for a discount (up to 100%) on the service (provided the parts aren’t too old) because I can turn around and sell them to another customer.

    @A.W.E.S.O.M.-O:
    Okay, so you can’t trade it for money or goods, but can you trade it for services?

  27. I always use Wampum at Best Buy. Make an offer on a TV, and when they turn to go get a manager, you wampum on the head and take the TV.

  28. robocop is bleeding says:

    @Wormfather is Wormfather: Hah. This means we’re not true boozehounds, as we’re not mistakenly thinking about drinking alone.

    And I think we deserve a beer for that.

  29. MissPeacock says:

    @SkokieGuy: Thanks for the defense.

    @speedwell: There’s no need to be so incredibly insulting. Why don’t you read the new commenting rules Ben posted.

  30. Thain says:

    Until he retired this year, my father bartered services with a local chiropractor. My father provided the chiropractor’s family with free dental work (provided they were responsible with their teeth. If one of the kids moved away for 3 years and didn’t have any cleanings and didn’t clean their teeth, no coverage), and in return, the chiropractor provided us with free adjustments. Sounds rather unbalanced, but we made enough use of the chiropractic work to balance out.

    Now that my dad has retired, my wife is thinking about bartering massage therapy for the chiropractor and his wife for adjustments for the two of us.

  31. cappy says:

    I just traded my graphic design skills to get a tree cut down. It only cost me a little time and some cheap business card printing.

  32. Shadowfire says:

    @atypicalxian: Hah! And how are they going to find out?

  33. Jonukas says:

    Re: Has anyone reading this used bartering to save money and/or afford something they might not be able to purchase?

    Not me, but apparently you can get a house…

    [oneredpaperclip.blogspot.com]

  34. SkokieGuy says:

    @Jonukas: I had workmen remodeling a home. I bartered two window air conditioners for two days work.

    Years back in the renting days, I barted half a month’s rent for furniture I was willing to leave behind, so the landlord had a ‘model’ apartment to show.

    And I will often negotiate reduced prices when shopping. Especially clothes, electronics, furniture, art, auto repairs, you name it!

  35. zentex says:

    My dad has been bartering for eons, and I picked up on it too. I just fixed a car in exchange for a massive website. I used to barter IT work for Dental work, right now I barter for CPA services.

  36. dtmoulton says:

    Coming from a town of 3,500, bartering was pretty common. Landscaping work for plumbing, electrical work for pet services… and so on. Guess it came with being able to know the people in your community.

    Try that in an urban area and you’re pretty much stuck with who you think you can trust on Craigslist or the skills of the two to three people you know in your apartment building.

  37. letoofdune says:

    @Wormfather is Wormfather
    @robocop_is_bleeding

    I’m so glad I’m not the only one with dyslexia this morning. In my mind, I’m going, “Sure! Bartending is a GREAT way to make money!”

  38. thebluepill says:

    The use of currency is the ultimate form of bartering.

  39. A.W.E.S.O.M.-O says:

    @Jonukas: That idea was cool, but once the story hit the media, I think people started trading big things just to be a part of it. Like, in the last three trades he went from a KISS snow globe to a movie role to the house. A snow globe to a house in three trades! Good luck to anyone who tries that today.

  40. JessicaJessica says:

    DID YOU KNOW:

    Bartered goods and services are considered revenue!! All income from bartering is taxable, and therefore must be reported to the Internal Revenue Service in the tax year the goods or services were received.

  41. picardia says:

    Instead of going to Geek Squad or something similar, a friend of mine deals with any computing problems by posting an ad offering beer and pizza to anybody who can fix her machine. (She is tech-savvy enough to be able to sort good candidates from bad.) There’s always a 20-something guy who decides he might as well get a free meal for some machine repair.

  42. opsomath says:

    I bet mine’s weirder than anyone else’s: I (a chemistry grad student) swapped chemistry lessons for judo lessons. The chemistry lessons were for my martial arts instructor’s high school age daughter.

    It was a really good deal, actually. For things like instruction in a specialized skill – where there’s a lot of expertise involved that was hard/expensive to acquire, but there’s a low cost of actually offering the lessons – swapping even is an amazing bargain for both parties.

    Does Craigslist have a skill-swap portion? If not, it should.

  43. rox1129 says:

    @zentex If you’re really bartering for CPA services and that CPA is not considering the bartering revenue for both of you, I’d get a new CPA. A CPA who doesn’t consider barters revenue is either an unethical CPA or a CPA who doesn’t know what they are doing.

  44. dmuth says:

    I fix peoples’ computers and give them links to my Amazon Wishlist. 9 times out of 10, I find a box of books on my doorstep a few days later. :-)

  45. Sidecutter says:

    @A.W.E.S.O.M.-O: You can trade sex for items or money, as long as it on film, apparantly. Not sure exactly how being paid for sex in a pornographic film is any different from being paid for sex otherwise.

    This nation has some really odd ideas.

  46. no.no.notorious says:

    my friends and i always had this joke about going into one of the expensive clothing stores in my town, dressed like someone from the dark ages with a horse on a rope leash…and attempt to trade the horse for a pair of $500 jeans.

    i’m about 70% sure it won’t work.

  47. ospreyguy says:

    I own a professional tutoring center and I have one parent who couldn’t pay but was a farmer. Now I get either a side of beef or a whole butchered pig every 6 months! I usually give most of it away to shelters or family now but our freezer is well stocked!

  48. Fujikopez says:

    My midwife has traded her midwifery skills in exchange for tattoos. That’s pretty cool.

  49. CapitalC says:

    Does nobody else live in a city where there’s a bartering network? It’s a system where you trade work for “barter bucks” (or whatever they call them) and you can then use them at other participating businesses. It seems like a good idea but I think I’d still rather earn real money. Remember the episode of the Simpsons with the Itchy & Scratchy Dollars? ;)

  50. Lin-Z [linguist on duty] says:

    I know this site is dedicated to helping the consumer, but things like bartering and haggling are really hard to deal with from the bottom-of-the-totem-poll retail end. People are constantly asking for discounts and now I hope people don’t start trying to barter with me. I think these articles should be qualified with something like “Try using these techniques with small or local business.” Although that should go without saying, it’s amazing how many people will try to bargain with a large corporate entity.

  51. quail says:

    @Jozef: Hmm, actually there is taxable income generated in barter. I read some time ago about it in the 90′s as it related to secondary economies. Apparently in Santa Fe, NM with the rise of land prices life long residents could not afford to stay. First a barter system got started to ease the financial burden and then someone started a banking system for the barter — bank notes usable only within the group of people doing the bartering. The article talked about the IRS having the right to tax that income, but since it was such a headache to try to figure out they had not pursued it. Or something like that.

  52. Jabberkaty says:

    Pizza and beer is a great bartering tool. It’s why I helped my friends move (that and chocolate chip pancake, goodness).

    Newspapers barter services for advertising (cleaning service got free ad, the size of the ad/number of times it ran = cost of service and number of times service was used.

    I love bartering for computer/electrical stuff with my savvy friends. Once, we got wires crossed on our phone lines and since it was an “inside” problem the Phone Company wouldn’t fix it without having us pay quite a bit. Pall of mine crawled under my house and rewired us – paid him in copious amounts of beer and a homecooked meal.

  53. @Jozef: “Second, as no money changed hands, to taxable income was created, so we both saved an additional 30+% in marginal tax rate payments.”

    Technically, that is untrue. Barter does create income and the IRS does tax it. You must report it.

    I’ve done a little barter. I do some legal work for artists, and sometimes I’ll barter for a piece of their art. There are some ups and downs to it; it’s difficult to find the right barter arrangement.

  54. ManiacDan says:

    You must be careful with bartering systems. As Eyebrows Mcgee (just above me) states, income is still being generated. ESPECIALLY if you’re a member of a “bartering club” that allows people to barter services using “club points” or something, those club points are just “money” in disguise. You absolutely have to report anything received in exchange for work performed to the IRS.

    Some people recently (especially in the South, for some reason) have begun using Silver Certificates again instead of cash. This is the same sort of thing, replacing the US Dollar with something of equivalent value. The IRS isn’t fooled.

  55. @ManiacDan: One of the reasons I don’t barter more often is that it can be tricky to value what you’re bartering for tax purposes. In one situation I did some work for a glass artist and wanted to buy one of his vases, and the costs were smack even, but we both felt it was easier just for me to bill him and him to bill me and to swap cash, for ease of tax reporting.

    Those bartering CLUBS I actually might be a fan of, since it’d considerably simplify tax issues.

  56. Dobernala says:

    About the IRS:

    If you avoided cash altogether and only performed bartering transactions, how are you supposed to pay taxes on your “income”? If you don’t deal in currency to begin with, then how exactly are you going to be taxed? Pay the IRS some percentage of the blueberries and widgets you traded for?

  57. BMRFILE says:

    About once a month, my neighbors and i would go to Costco together so we can split up the products by buying in bulk. There are some good deals to be had when you do this, especially if two parties can match up a lot of stuff they need to get at Costco.

  58. @Dobernala:

    Yes.

    As Eyebrows said previously, sometimes you are just better off to exchange goods and real money.

  59. AlbusSeverusPotter says:

    my parents are in the restaurant industry, so they are professionals at bartering. it costs $300 to have the lot plowed/salted when it snows. so they do that and get $300 worth of free food. we needed a new roof at home and the roofing company needed a party. traded that off and currently our bathroom is being redone for about $7000. we are paying them around $3000 and the rest is food for the company who is doing it.

  60. Hijakk says:

    @Sidecutter: Technically, the people having sex in pornographic films are not being paid for sex, they are being paid to act in a film. Where they have sex.

    Stupid semantic distinction, I know, but it’s how the porn business doesn’t get shut down as a prostitution racket.

  61. atypicalxian says:

    @Shadowfire: @Dobernala: When the IRS does an audit of a 1040, they do an income probe — they ask if you’ve received income from a list of sources (bartering, rentals, inheritance, sale of business property, etc.) whether or not it’s on your return. If you don’t lie and you did bartering, and you didn’t list it on your return, then they can open up the audit to include that source of revenue. One of the ways an audit is triggered is by random selection, and with those they go through everything (IRS employees experience this themselves, going back through the last 3 years’ returns, as a condition of hiring).

    Engaging in bartering and being taxed on it presupposes, of course, that you don’t lie. If a bartering economy does start blossoming, don’t think Uncle Sam won’t try to figure out ways to get its sizable piece of the action.

  62. WeAre138 says:

    How the IRS gets involved interested me. On their site, they say this about barter that does not involve actual money: “The fair market value of goods and services exchanged must be included in the income of both parties”

    So, how would you satisfy the IRS if you bartered for everything and you never saw a single penny?

    Reference:
    [www.irs.gov]

  63. atypicalxian says:

    @WeAre138: The key phrase would be “fair market value”.

  64. WeAre138 says:

    @atypicalxian: The way I interpret that is let’s say you barter 2 hours of auto mechanic work for 1 hour of dental services. The IRS would expect the mechanic to add 2 hours @ $50/hr to his annual income, and the dentist to add 1 hour @ $100/hr to his annual income. Both parties would pay the appropriate income tax on that $100.

  65. TechnoDestructo says:
  66. TechnoDestructo says:

    @WeAre138:

    Yeah, would the IRS accept services for payment of taxes?

  67. atypicalxian says:

    @WeAre138: You got it right. It’s almost like each party got a 1099 for their services. If, say, the mechanic charges $50/hour, then that’s what the IRS will want, because it’s a stated amount that the mechanic typically charges. In cases where the amounts are not stated (such as the blueberries illustration Dobernala gave), the fair market value of the goods/services at the time of the transaction would be required.

    @TechnoDestructo: Obviously not — they’ll want the cash equivalent. Even though bartering may flourish, we’re still mainly a cash-based society, and even with credit cards and electronic transactions, that isn’t changing anytime soon. The government may be turtle-esque in doing many of its duties, but that tortoise will beat the hare when revenue to feed its bureaucratic belly is at stake.

  68. mattbrown says:

    Unsure if this had been posted, but this is very common in the services industry. I know a few people who run their own businesses (accountant, plumber, computer tech) that consistently barter job-for-job.

    It’s actually a much better way to do things; like building a good team at a small business.

  69. colie-best says:

    Hi i think the interesting point of bartering involves transfer of ownership. If you provide the recieving party transfer of ownership for all services rendered, you wont have to worry about the irs until you liquidate your proceeds. i believe bartering yor ownership is how you save depending on how long you hold on to the service that was originally bartered

  70. Nerys says:

    I do not recognize the IRS or Governments right to tax bartering. If there is NO money exchanged there is NO sales tax. If there is no money paid above the value of the services there is NO INCOME and NO REVENUE.

    The ONLY way I could even IMAGINE a possibly legal or moral way to tax bartering is if the bartering was UNEVEN. Such as me trading a bicycle for a CAR worth much more than the bicycle. BUT then you run into another major issue. WHO gave the government the right to DECIDE what things are worth. Where is that “power” in the constitution.

    I also do NOT recognize Income Tax. I do not pay income tax. I pay “extortion” penalties because they have a bigger stick than I do. The same way you pay the big ugly man who threatens to beat you up if you do not pay him protection money. You can call it anything you want Extortion is still extortion.

    WAGES are NOT INCOME. Absolutly ZERO income or revenue is generated when you earn wages. Absolutely None.

    You gave up hours of your LIFE in exchange for Money. That is an EVEN ZERO net positive end result. There is no income there is no profit there is no revenue.

    When you get a commission. THATS INCOME
    When you get a bonus THATS INCOME
    When you earn a PROFIT on something you sell THATS INCOME.

    INCOME TAX as it is currently applied is by definition SLAVERY or Indentured Servitude and is NOT LEGAL.

    Again I pay it only because the big ugly man threatening me demands I do and there is no way to defeat this man as of yet. So as others do I pay this illegal tax.

  71. opsomath says:

    I traded chemistry lessons for judo lessons. Swapping expertise: the best possible trade.

    Another awesome one: swapping media. Paperbackswap.com and its affiliated swap sites for DVDs and CDs – pure win.

    Of course, it would be illegal to make copies of swapped CDs before sending them off.