Bartering comes back in a troubled economy

Tired of her pink bathroom countertops but short on cash for a remodel, Rachel Alemany decided to get the work done the old-fashioned way: through bartering.

Alemany has experience putting down flooring, so she and her husband traded flooring work with a neighbor who has tiling experience.

"It was that easy," said Alemany, a special-education teacher from Pittsfield, Mass.

She got the idea from her mother-in-law, who exchanged renovations for room and board, and she might try it again: "I have other rooms in my house that need work."

Bartering -- the trading of goods or services without using cash -- is making a comeback in a troubled economy.

It can be as simple as trading baby-sitting with another family, or as complex as an exchange with strangers facilitated by one of the several Web sites that have sprung up to connect barterers.

Traffic is up at local organizations such as the Midwest Barter Exchange, a Kalamazoo, Mich.-based outfit that acts as a go-between for about 1,000 business clients.

"Before, we were out beating the bushes trying to get people to join, and now they're calling us," said Lance Dorsey, a customer-service representative for the exchange.

Six barter exchanges operate in Virginia, including two in the Richmond area -- the BancMarc barter exchange and the James River Trade Exchange.

Boise, Idaho, beautician Heather Wood has traded haircuts and pedicures for day care, kids' clothes, a paint job for her car, an oil change, a set of professional portraits for her family and dental cleaning.

"It's fun, and it builds a whole different kind of a relationship," Wood said. "They're getting what they want and I'm getting what I want. I would much rather do that than make cash most of the time."

These days, making cash isn't always an option, and many have decided it is worth the effort to trade, say, a kid's outgrown bike for a neighbor's lawnmower, or a massage for some gardening supplies.

"I'm finding it a little bit difficult to sell anything right now," said Jeremy Kildow of Nampa, Idaho, who chose bartering when he decided to get rid of a $1,000 camera, a kayak, a stainless-steel kitchen range and other items.

Bartering can be less expensive than buying because there are few overhead costs for rent or staff.

However, not all costs are eliminated. The IRS considers barter dollars as identical to real currency for tax reporting, and barterers must obtain a special form, the 1099-B.

But bartering can also be more fun than laying down cash.

"The human element and the relationship between buyers and sellers becomes more important when we get involved in bartering transactions," said Gary Forman, president of a company called Dollar Stretcher that publishes methods for saving money. "I'm not sure we don't have some longing for that."

Some things are easier to barter than others.

While carpenters, massage therapists and hair stylists have a set price for their work and can easily trade it locally, other professionals, such as physicians who work in hospitals, can be constrained by the institutions that employ them.

Nevertheless, Forman estimates that 60 percent of the companies on the New York Stock Exchange participate in some kind of bartering.

Of course, there are no signs that bartering will ever catch up with cash.

Professor Andrew Whinston at the University of Texas at Austin, who has written about bartering, said the Internet has made bartering easier, just as eBay has made it easier to sell things that used to sit in the attic for years.

He doesn't see bartering as something that will "take over the world," but he said nobody knows for sure what's going to happen next with the markets that rely on credit and currency.

"Maybe if the economy goes totally down the drain, we'll all be bartering," Whinston said. "I'll be selling copies of my articles in academic journals for a meal at a restaurant."