Bartering is growing in popularity as the recession deepens with the increase in prices and taxes and cash is harder to come by.
What I mean by long term bartering agreements is to create an agreement between two people to exchange goods on a continuous basis. For example, you could agree to exchange two dozen chicken eggs for one gallon of milk every week for several years.
Bartering is usually an exchange of goods for a single transaction. But if you are going to need the goods again and again, then creating a long term bartering agreement eliminates the need to renegotiate every time you are in need of the goods and it allows you to establish a distribution place as part of the agreement.
For example, if you agreed to exchange eggs for milk, part of the agreement could include where the exchange would take place each week. Both parties benefit from the agreed value and place of exchange, because these two things are the most important to any means of exchange to determine predictable prices and supply of goods.
Clothes For Flowers
Our long term bartering agreement is to exchange clothes for our one year old child in exchange for garden flowers. The family that we are trading with has a two year old girl, which always has clothes that no longer fit and they are in need to flowers around their house. We have tons of flowers around our house that we could easily give away and we are constantly in need of clothes for our one year old.
The idea is that this exchange of clothes for flowers could go on for several years.
Instead of bartering, we could have sold our flowers and the other family could have hosted a garage sale each year to sell their clothes. The money could then be used to purchase new flowers and new clothes. Another option is just to give away the clothes and flowers to avoid the work of selling them, which we have done many times.
Both families have done the garage sale thing before and realize just how much work is involved for the new dollars you end up with, not to mention the cleanup and getting rid of everything that doesn't sell.
Still another option is to get another job or work more hours to increase each families income to purchase these goods that we need. (not my recommendation)
How much money will we save?
It’s hard to say how much money we will save, but I’m going to give it a try. I would guess this agreement could be worth much more that most people think - probably several thousand dollars per year.
Assuming we exchange 10 boxes of clothes for 10 boxes of flowers per year, 1 box of clothes or 1 boxes of flowers is probably worth about $100. If we had to purchase these goods from a store, we would also need to pay sales tax of 7.375%. And if we had to purchase these goods from money earned as income, we would need to pay income of 25% (not counting SS, Medicaid, )