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No cash? No problem, if you barter

  • Story Highlights
  • Many Americans are bartering as a way to cope with tough economic times
  • Bartering involves trading goods and services without exchanging money
  • Researcher: Bartering activity rises dramatically during economic downturns
  • "We trade for just about anything you can think of," barter network president says
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By A. Pawlowski
CNN
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(CNN) -- Miriam Brown has always wanted to visit Cape Cod, but when she recently began to plan a trip and found out she would have to pay $200 or more a night for lodging, her dream vacation seemed out of reach.

The online community Craigslist reports the listings in its barter section have almost doubled since last summer.

Miriam Brown and her husband bartered their services for room and board on Cape Cod.

Brown, who lives in New Orleans, Louisiana, is an accountant. Her husband is a home renovations contractor.

Like many people dealing with a soft real estate market and high food and gas prices, they just don't have that kind of extra cash for a trip.

"I have traveled a lot in prior years, but after [Hurricane] Katrina, there's just no money for traveling," Brown said.

So she still plans to go, but she won't spend any cash at all on lodging.

Brown has joined the growing ranks of Americans who are bartering -- trading goods and services without exchanging money -- as a way to cope with tough economic times.

Brown posted an ad in the barter section of the online community Craigslist last month, offering to trade her accounting skills and her husband's knack for home repairs in exchange for room and board on Cape Cod, Massachusetts.

She has lots of company.

There were some 142,000 listings in the barter section of Craigslist in July, or almost double the number posted during the same month last year, according to Craigslist spokeswoman Susan MacTavish Best.

"When the economy turns unfriendly, Craigslist users become far more creative to get their everyday tasks done," Best said.

Swapping 'to get by'

Other Web sites that put Americans in touch with like-minded people who are willing to trade everything under the sun have also seen a boost in traffic. SwapThing, which lists almost 3.5 million "things" available for trade, reports its customers are bartering for different reasons than before.

"I think a few years ago it was more for fun," said Jessica Hardwick, SwapThing founder and CEO.

"But we've seen a real shift in the last year, and especially an increase in the last few months, where I think people are really doing it to get by."

Some of the most popular items to trade for late this summer were school uniforms, which some parents found they could not afford to buy for their children, Hardwick said.

Experts aren't surprised Americans are becoming more financially creative during an economic downturn.

Dealing with the economy

• 67 percent of consumers have haggled in recent months, compared with 33 percent in 2006

• 61 percent of consumers now regularly use a shopping list, compared with 35 percent last fall

• 70 percent of shoppers now look primarily for "the deal" in the Sunday inserts, compared with 51 percent last fall


Source: America's Research Group

"Historically, when times get tough, you see a 50 percent-plus increase in bartering as a way for people to be able to buy things or get things and do it economically," said C. Britt Beemer, chairman of America's Research Group.

The company talks with thousands of consumers every week to gauge their spending habits and attitudes.

A couple of years ago, many Americans had $500 to spend at the end of the month, but that money has evaporated because of rising prices, Beemer said.

"We've never had a time, at least in my lifetime, where you have food and fuel going up at the same time. So it isn't a question of buying things, it's a question of buying nothing," Beemer said.

Breast implants and a horse

Businesses have long recognized the benefits of bartering, and there are hundreds of barter networks set up across the country to fill their needs.

They use barter credits as currency, so a plumber in need of a filling doesn't need to search for a dentist's office with plumbing problems to make a deal. He can fix a leaky pipe for one member of a network and use the credits he earned for that job at any other.

Since all kinds of companies are members, the trades can be all over the map, said Michael Krane, president of Green Apple Barter Services in Pittsburgh, Pennsylvania. His company has brokered everything from breast implants to college tuition to a horse.

"Really, there are no limits to it. We trade for just about anything you can think of," Krane said.

Bartering on this scale is also robust in tough economic times. Krane said his exchange has seen a 20 percent rise in barter transaction volume in the first six months of this year.

A longtime client is Thomas Forrest, an orthodontist in suburban Pittsburgh who barters his services for everything from office improvements to stationery. His practice hasn't been affected by the economic downturn, Forrest said, but some of his patients seem glad to be able to visit him under the barter arrangement.

"I think if you have a business owner who has children in need of braces, I sense a gratitude that that's available," Forrest said.

Barter exchanges must carefully document all trades, since the Internal Revenue Service considers income from bartering as taxable. However, a barter exchange "does not include arrangements that provide solely for the informal exchange of similar services on a noncommercial basis," according to the IRS.

In New Orleans, Brown and her husband are getting ready to go to Cape Cod after finding a taker for her bartering offer on Craigslist. The couple will work five hours a day in exchange for staying in "a beautiful three-bedroom house right in the center of it all," Brown said.

"We can do a lot more if we don't have to pay for room and board," she added.

All About National EconomyCraigslist Inc.Internal Revenue Service

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