Inflation is a very real drain on your wealth. Rising prices hit your pocketbook — especially when an increase in wages does not accompany price inflation. If you want to fight inflation, there are a number of strategies you can employ. One of these strategies is to barter for the goods and services that you want.
Bartering is on the rise since the recession, as more people become interested in getting good deals and living frugally. If you want to barter, here are 5 things to keep in mind:
1. Know What You Have
Before you get started, you should know what you have, and what you are willing to offer. Do you have a basement full of stuff that you never use? Do you have skills that you are willing to share in exchange for a service you need, or for goods? Take stock of what you have, and understand what you are willing to give. Realize that if you provide a service in barter, you need to be willing to spend the time.
2. Know What You Want
You should also have a fairly good idea of what you want. Why do you want to make the exchange? Do you have a goal to obtain a specific object? Or is there a service you want? Be clear on your expectations.
3. Understand the Values Involved
Next, you need to have a clear idea of the values involved. You also want to make sure that you and your bartering partner agree on the values involved. This can be a little more difficult when it comes to service barters. However, if you are both bartering in good faith to come to a solution that benefits you both, chances are that you can come up with something that is equitable. When bartering with stuff, this is a a little easier.
When we had our sprinkler system put in by a small business owner we knew, we offered a like-new child backpack carrier. The landscaper, an avid outdoorsman, was thrilled. He gave us a discount on his services in return for the backpack. We paid less for the installation, and he got the backpack he wanted for less than he would have paid at the store. We were all happy.
4. Know Where to Go
To barter successfully, you need to know where to go to find bartering partners. There might be a local bartering network you can join. Another option is to barter with the help of Craigslist.org, or visit a web site like Freecycle. You can also look at the numerous swap sites for everything from music to books to services. There are also business exchanges and bartering networks (although you may have to pay a flat fee to join up initially). A business exchange can help you set up barters that involve more businesses, as well as help you work in “trade dollars.”
5. Make Sure It’s All Legal
Before you seal the deal, put together a contract. It should explicitly state what is being exchanged, and the time frame involved. You can get a professional to look it over (maybe barter!) if you want.
Additionally, you need to understand that the IRS expects you to record barter transactions — especially for a business. Complete all exchanges by the end of the year. If you have received services or products, but have yet to reciprocate, it is considered income. Check with a tax professional to see what the requirements are regarding reporting your barter exchanges.
Miranda is freelance journalist. She specializes in topics related to money, especially personal finance, small business, and investing. You can read more of my writing at Planting Money Seeds.