trades en-US Barter Explained: Why It's Wise to Barter <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/barter-explained-why-its-wise-to-barter" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="" alt="handshake" title="handshake" class="imagecache imagecache-250w" width="250" height="166" /></a> </div> </div> </div> <p>&quot;Barter.&quot; We hear that word a lot these days. Do a Google-search and you'll be deluged with websites on the subject. But what exactly is barter, why is barter seeing a huge resurgence due to the bad economy right now, and how can you get involved with bartering?</p> <h3>So, what is barter and why the excitement?</h3> <p>Barter, simply put, is the &quot;cashless exchange of goods and services between parties.&quot; An example of bartering in business would be a florist exchanging a bouquet of flowers for an oil change at a car repair shop. On an individual basis, it's what kids do when they &quot;swap&quot; or &quot;exchange&quot; trading cards in the school yard, or if you mow your neighbor's lawn in exchange for them cleaning your car. These are all examples of bartering.</p> <h3>Benefits: why barter, and how does it work?</h3> <p>Let's build on the above examples. Children often have a much simpler outlook on life due to their age and inexperience. Trading things they have but don't really want for things they do want just makes simple sense. Likewise, as adults, if you hate mowing grass, but enjoy cleaning, the neighborly example just makes sense too. The outcome is still the same &mdash; it just gets done in a more enjoyable manner. The next time you're faced with a chore you dislike, why not ask around your neighborhood? You're sure to find somebody willing to trade with you.</p> <p>The benefits for a business owner are just the same, but in a slow economy much more important. Almost every business has the constant burden of cash flow. You've heard the expression &quot;Too much month at the end of the money&quot;? Most business owners have double the bills to pay (a personal mortgage and rent for their company, two utility bills, etc.) and are totally responsible for the amount of money that comes in. Therefore, the flow of money is twice as important to them. Let's break down the example above to see how it works.</p> <p>The florist has already bought and paid for the flowers. (They are in her inventory as a perishable item.) What does it really cost her to put together a $35 bunch of flowers? Her cost (cost of goods) is probably about $15. So, if she trades that $35 bunch of flowers for an oil change she would have paid $35 cash for, the benefits are as follows:</p> <ul> <li>She just saved herself $20 in cash.<br /> &nbsp;</li> <li>She turned over her inventory.<br /> &nbsp;</li> <li>She potentially made a new customer.<br /> &nbsp;</li> <li>She has potentially marketed herself to a new area.</li> </ul> <p>How does this benefit the mechanic? It helps him in much the same way. He saves himself the cash outlay for the flowers, she becomes a new customer, she may recommend him to her friends and associates, and he filled some dead or down time he had.</p> <h3>All that just to save $20 cash?</h3> <p>Admittedly, that does seem a laborious way to save $20, so what's the big deal if companies are saving so little? The above scenario was an example of traditional barter or what is called reciprocal trading (just like the old days, two parties trading with each other). Even though it seems a small savings, it's actually almost a 50% cost reduction. What if you could save 50% on other things? Construction work, landscaping, printing, perhaps put on a new roof, take a vacation, do more advertising, or repave your parking lot? If done correctly, from an economical point of view, bartering is actually better than using cash, because it is creating something from nothing. Or to put it another way, bartering takes your surplus (time, inventory, or capacity) and turns it into useful things you would have had to spend money on. Now that makes sense in any economy!</p> <h3>The challenge of traditional barter vs. a barter exchange.</h3> <p>Any smart business owner would love to be able to save 50% on their cash expenses. Some of the problems with traditional barter are:</p> <ol> <li>Finding a match. Example: how do you find a roofer that wants $5000 of flowers?<br /> &nbsp;</li> <li>Timing: if you do find a roofer, do they want the flowers now?<br /> &nbsp;</li> <li>How do you ensure the trade happens amicably?<br /> &nbsp;</li> <li>Who ensures the trade is fair value?</li> </ol> <p>Let's tackle these points in order.</p> <p><strong>1. Finding a match</strong></p> <p>Even though many business owners have more time on their hands and could spend that time calling around other businesses looking for a trade, most are not hardened sales professionals. Can you really imagine the florist phoning 30 mechanics to see who wanted to swap flowers for an oil change? Now imagine her dilemma trying to find a roofing company! Most business owners can't be bothered, so they usually just spend the cash or go without.</p> <p><strong>2. Timing</strong></p> <p>Let's just say she does find a roofing company that is willing to take on the job. Do they want the flowers right now? Perhaps they want a $150 bouquet for the next 34 weeks, or they need the flowers for an upcoming wedding. That is all extra stuff to keep track of and budget for.</p> <p><strong>3. An amicable trade</strong></p> <p>Since they are both experts in their own fields, they know their own value, but what ensures that they have a good deal happening? This point is so closely linked to the next, I've decided to expand more there.</p> <p><strong>4. Ensuring a fair trade</strong></p> <p>Horror stories abound with people trying to barter with others and not getting a fair deal: either they give their stuff and the other party doesn't reciprocate, or they short them, or it simply doesn't happen as planned. Obviously, there is no benefit to something that doesn't happen correctly, but how do you ensure it is fair for all concerned?</p> <p>Because of the above pitfalls and problems, organizations specializing in bartering emerged in the mid-1950s called barter exchanges. Many early barter companies encountered some challenges, but because of their need, some improvements in the industry have been made. Even using an organized barter company from the last century had its problems (inflated pricing, cash-blends negating the savings benefits, cash business converting to barter, and under the table deals).</p> <p>Not until Merchants Barter Exchange (MBE) came on the scene in 2000, setting a brand new standard for organized bartering did the industry change forever. Since then, every other barter company of any size has been trying to copy the ethics and standards of MBE, which thus far is the only American barter company to be able to do the small trades like every other barter company, but also the large scale bartering transactions (like $100,000 of printing, $70,000 of paving work, $30,000 worth of appliances, all entirely on trade with no cash).</p> <h3>So how do barter exchanges work?</h3> <p>By acting as both the bank and the coordinator between transactions, an exchange is able to control how trades are handled. In simple terms, demand for goods and services comes into the exchange from the members around the US. From there, the barter experts coordinate where that demand goes. Nothing is traded directly, so there are none of the challenges of one party going first, then not getting stuff in return. The exchange brokers keep track of everything via their sophisticated software platform, transferring barter dollars as credits for the equal cash value of trades.</p> <h3>Uncle Sam and the tax implications?</h3> <p>Obviously, any form of commerce has the interest of Uncle Sam. Back in 1982, an act of Congress deemed all barter companies the same as banks and credit card companies (&quot;Third Party Record Keepers&quot;), and therefore, they must issue 1099b forms to members each year and treat transactions the same as cash for reporting needs. See the IRS website for more details on <a href="">bartering income</a>.</p> <div class="field field-type-text field-field-guestpost-blurb"> <div class="field-label">Guest Post Blurb:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> <p>This is a guest post by Anthony James Donnelly, a barter expert, business consultant, and serial entrepreneur.</p> <p>Links to other articles by Anthony:</p> <ul> <li><a href="">A Barter Expert's Point of View</a></li> <li><a href="">Choosing a Barter Company</a></li> <li><a href="">Just Some Advantages of an MBE License Over a Standard Franchise</a></li> </ul> </div> </div> </div> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="">Anthony James Donnelly</a> of <a href="">Wise Bread</a>, an award-winning personal finance and <a href="">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="">Save More Gas by Safely Following Trucks</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="">Eight Natural Ways to Make Water More Flavorful</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="">How Big of a House Do You Really Need?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="">Five Reasons Why I Love Public Transportation</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="">Is Six Figures Really That Much?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Frugal Living barter saving money trades Thu, 08 Oct 2009 14:00:02 +0000 Anthony James Donnelly 3690 at Zen Spring Cleaning (and making a little cash off it too) <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/zen-spring-cleaning-and-making-a-little-cash-off-it-too" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="" alt="" title="" class="imagecache imagecache-250w" width="250" height="166" /></a> </div> </div> </div> <p>This is it. Tomorrow is the beginning of the big day the husband and I have waited anxiously for all winter: spring-cleaning. The kids are going to grandma&rsquo;s over night and armed with a couple of Dwell Magazines and a few books on creating Zen in the home, we&rsquo;ve vowed to organize the garage and kick the clutter habit once in for all or at least for 2008. Our goal? Nothing stacked on any surface and nothing double stacked in the bookcases. We want to walk in the living room and see flat surfaces everywhere.</p> <p>My mother was actually the queen of this. Before every Christmas she&rsquo;d place two grocery bags in the middle of the living room and tell my brother and I that they had to be filled with things we didn&rsquo;t play with or read anymore before Santa would come with new things. As a spring take on this, my husband and I are shooting for twenty brown shopping bags filled with things we don&rsquo;t want or use&ndash;&ndash;wish us luck. It&rsquo;s good to create your financial goal for spring-cleaning too because it helps you let go of things that may be worth something that you don&rsquo;t really want or neat. We&rsquo;ve set the goal of $1000 of selling on eBay from our Spring-cleaning and $300 for a garage sale. That&rsquo;s almost as much as George Bush&rsquo;s economic stimulus package for a family of four.</p> <p>My husband is better at this than I am. As a former eBay Powerseller, he doesn&rsquo;t even let something in the house unless he can assess its resale value the moment it enters the house. I don&rsquo;t quite think that way though I&rsquo;m learning. Here&rsquo;s a list of a few household items and perhaps the best thing that can be done with them and when.</p> <p>As I look across the living room and out the window into the garage the number one thing I see cluttering our lives is reading material: books, magazines, comics. You name a magazine and we&rsquo;ve got an issue somewhere. But our house is a dainty 1000 square feet and there is literally no room left in the six bookcases in the house. If this sounds familiar to you, stop and ask yourself what the hell you need all these books for? Even if you&rsquo;ve already read all the books in your collection (I&rsquo;m betting you haven&rsquo;t, because I sure as hell haven&rsquo;t) when will you have time?</p> <p>So, the husband and I had a book chat this evening and I think it was a pretty sound agreement: here&rsquo;s how we are dealing with the books in the house and in the garage:</p> <p>&bull;Out of print and rare books stay<br /> &bull;Current reads for research, interest stay<br /> &bull;Children&rsquo;s books stay<br /> &bull;Books used for school stay (I teach)<br /> &bull;Mass market books, even those we like, go<br /> &bull;Current Best sellers go<br /> &bull;Books we love go if there&rsquo;s no chance we&rsquo;ll re-read them in less than 5 years</p> <p>This is making organizing the bookcases much easier. The living room bookcases will now house out of print, rare, and current reads. The garage bookcases will store books used for school and rows of books scanned and ready to sell on eBay and Amazon. Oh my goodness! Space has opened up! But what to do with the &lsquo;go&rsquo; pile?</p> <p>Garage sale, donate to your local Friends of the Library, sell or swap online (<a title="" href=""></a> or <a title="" href=""></a> for example). Books I love I often give away to friends and students. We usually send friends not one present, but a Christmas or birthday box of presents. Throwing a couple of good books in gives the recipient good reads and opens up space.</p> <p>One tip for selling books on eBay and Amazon, go through the book collection and see if you have any college reads. Set those aside and label that box college. Come August, list that box of books on eBay once students have started scouting for this semester&rsquo;s list. No matter what you charge, it&rsquo;ll be cheaper than the college bookstore and that&rsquo;s what they&rsquo;ll be looking for. Books have such little resell value that the only time to cash in is really at the beginning of each semester.</p> <p>As they are heading out of your dominion, label the boxes of books appropriately so you don&rsquo;t have to go searching through them again and again to find out what&rsquo;s in there.</p> <p>Magazines and comics, believe it or not, have a much higher resell value. I attribute this to there being more photos and pictures and Americans not having the patience for books without such things. While my husband has ever copy of WIRED magazine ever printed, and I hold onto the National Geographics and Harper&rsquo;s, most other things we&rsquo;ve agreed not to hold onto. Yet somehow, there are stacks here and there. It seems a shame to have them go to the recycling. Especially the ones we didn&rsquo;t get around to reading. What to do?</p> <p>&bull;The ones with good ads and photos put in the kids are supply bin&mdash;you never know when you are going to need to make a collage with the preschoolers.</p> <p>&bull;Library free table donation<br /> &bull;Waiting rooms need you&rsquo;re Sun Magazines to balance out the Good Housekeeping&ndash;&ndash;if you have a lot of cool small press magazines drop them around town strategically and it&rsquo;s as good a political statement as any. Hooray! The religious homeschool kid just picked up your copy of Bitch Magazine: Feminist response to pop culture! Your job is done.<br /> &bull;All music or acting related magazines are going to go on eBay. Because someone somewhere wants that Vanity Fair with Harry Potter and my Bust Magazine with Sandra Oh. Currently my husband is unloading a secret stash of Rayguns he forgot he had. Every one of them got a bid.</p> <p>Next we have too many DVDs and CDs. If it ain&rsquo;t something you&rsquo;ll watch time and time again or is a classic then why have it? Keep The Princess Bride; get rid of Kindergarten Cop. Once my husband has made files of our CDs to play on our computers and iPods, we rarely ever see the CDs again. So why keep them? Occasionally nostalgia will get in the way. I&rsquo;m not giving up my tape of Leonard Cohen&rsquo;s I&rsquo;m Your Man because I bought it for .99 back in the day and it was the first time I&rsquo;d ever heard him and the record store I bought it at has long since closed (what a sap).</p> <p>Then there are the hidden items in the house taking up valuable real estate in the closets&ndash;&ndash;the clothes and shoes. My husband insists that he should have no more than six pairs. OMG! Only six?! Yeah, that&rsquo;s not working for me but I can make an effort not to go beyond 20. If you haven&rsquo;t worn it in two years it should be in the bye-bye pile. Clothes are another matter entirely. There are clothes you wear and then, if you are like me, clothes you collect. And then there is the matter of keeping at least five different sizes.</p> <p>I apply the same get rid of stance that we apply to the books:</p> <p>&bull;Keep rare, vintage, interesting pieces<br /> &bull;Keep functional things you wear everyday<br /> &bull;Get rid of anything that makes you look fat because, it&rsquo;s always going to make you look fat (odds are it&rsquo;s not just the clothes)<br /> *Get rid of everything else.</p> <p>The get rid of pieces do best at garage sales or donations to the thrift store. My advice is to find smaller thrift stores to donate to or make friends with someone who works or manages one. Odds are that if you drop off five boxes of clothes and you see a sweater you like, you can get them to give it to you. I have two I donate to that I also shop at and I try to only buy from them on days I&rsquo;ve donated. They either give me a huge discount or let me walk away with a free bag of goodies. It feels very freeing to get rid of the wait of five boxes with a simple cardigan in your hand.</p> <p>Toys! That&rsquo;s the hard part. There are our kids&rsquo; toys and all those remnants of our childhoods we&rsquo;ve bought on eBay. My husband&rsquo;s solution for toys and Zen Spring Cleaning was to create a whole wall of shelving in the garage with white storage boxes. He&rsquo;s labeled them things like &ldquo;Superheroes&rdquo; and &ldquo;Thomas the Train&rdquo; and &ldquo;Hello Kitty&rdquo; and &ldquo;Lego.&rdquo; Each kid gets access to one box from the toy wall a week so that there are no more than two toy boxes in the house at any one time plus art supplies and puzzles. We continually sift out toys we don&rsquo;t want in the house to garage sale, donation, or giveaway prizes.</p> <p>There's also the karmic side to it. I find the more stuff you give away, the more things you want seem to come your way. My daughter receives hand me downs with the tags still on them and I can't help but think that if I quit giving away her things she's outgrown, my freebies would go to.</p> <p>Finally, return everything you may have borrowed to their rightful owners. The owners will be mad you are returning stuff they have no room for, but insist. It&rsquo;ll get the ball rolling for their spring-cleaning too. And have that garage sale next weekend too.</p> <p>What&rsquo;s lurking in your closet, garage and living room that you should get rid of? Where will it end up?</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="">Maggie Wells</a> of <a href="">Wise Bread</a>, an award-winning personal finance and <a href="">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="">How to Get Rid of All Your Crap</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="">EBay’s Non-Paying Bidders</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="">How to Get Rid of Your Junk</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="">Who Moved My Stuff?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="">Everything You Need to Know About Unclaimed Property</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> amazon marketplace eBay garage sale Making Extra Cash organizing spring cleaning thriftstores trades Sat, 05 Apr 2008 08:47:04 +0000 Maggie Wells 1980 at