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Who needs cash? Barter can be better than buying
KARA McGUIRE, Star Tribune
With gas prices climbing, Nikeeta Psyck was ready to kiss her 1999 Chevy Blazer with oversize tires goodbye. But for that same reason, the dealers she tried wouldn't even take the truck as a trade. "Nobody was buying 4-by-4s," she said.
So Psyck headed online, to free classified ad site Craigslist, where she has successfully bartered several unwanted items in exchange for furniture, clothes, you name it. She listed her truck, waited a few weeks and became the proud new owner of a 1999 Grand Am last month.
With unemployment up, home values down and other prices rising, consumers aren't so confident. So instead of pulling out their wallets, many are turning to the age-old business of bartering to get what they need or simply want.
"The economy right now really kind of stinks, and it costs more for a lot of things," said Psyck, 36, of St. Paul. "If you can barter something that you have for something you're looking for, it saves you money."
Bartering on Craigslist has grown substantially during the economic downturn. There were 126,710 listings in the barter category last month -- up 80 percent compared with May 2006.
In Minnesota, bartering is up 77 percent over the same period, with 3,531 barter listings in May.
"In a down economy, people are sometimes looking for a cashless way of doing business," said Craigslist CEO Jim Buckmaster, who said the site also saw a rise in bartering during the 2000-01 recession. "People are looking to stretch their household economy a little bit by swapping items they don't need or providing a service like singing lessons or bicycle repair or whatever it may be for something that they're looking for."
Bartering also rises around the holidays, and it's attracting Americans concerned about their environmental footprint and who hate to think of a perfectly good item in a landfill somewhere, Buckmaster added.
Peruse the Minneapolis area barter listings on any given day and you'll find an incredible array of items. A 1983 Buick hearse for a hot rod, personal training for dental work, a driveway sealcoated for custom printed T-shirts, even rare turkeys for a milk cow.
Some listings are created by business owners who hope to drum up business through trades, while other posts are made by individuals. A growing number allude to gas prices or economic hardship.
A Columbia Heights resident is searching for a scooter and "would like to trade one of my prized possessions (since i can't ride a guitar to work)." An insurance agent is looking to trade a boat for an "easy-on-gas car." A mom is willing to part with her TV cabinet for a double stroller; she said she can't afford one because her husband is laid off.
Fun and frustrating
In the midst of a divorce and out of work, 25-year-old Emily Bowers has turned to Craigslist in search of groceries and pet food for her dogs Molly and Simone. The Minnetonka resident has traded an exercise bike, artwork and knickknacks for necessities and creates a new post each week with a laundry list of what she's willing to trade and what she needs. Her experiences with bartering are mixed: "It feels really good once you've completed a sale, and it can also be frustrating when people say they are interested, but then never respond to e-mails," she said.
While it can be fun and exciting, bartering is harder than heading to the store, said Mark Bergen, chair of the Marketing Department at the University of Minnesota's Carlson School of Management. "Prices are actually something that makes [transactions] easier," explained Bergen, who has studied bartering.
Swapping is also more time-consuming, with both parties needing to conduct independent research and negotiate a deal. The old adage "time is money'' doesn't always ring true in a recession. "In a flush economy, there's more people who have more money than time and in a down economy it starts to shift the other way, where people have more time than money," said Buckmaster. "And if they have stuff to get rid of, they have time to sell it."
Then there's the whole business of taxes. If you're trading professional services, such as a carpenter making cabinets for a dentist who will fill his cavity, the value of those goods and services may be subject to income tax. But for consumers taking part in "the informal exchange of similar services on a noncommercial basis," taxation won't be an issue, according to the IRS. Minnesota state sales tax also may apply to barter transactions. Go to www.taxes.state.mn.us and put "barter'' in the search field.
Besides Craigslist, several other websites facilitate trades, including www.BarterBee.com, www.BarterBucks.us and www.SwapThing.com.
The tougher economy has increased interest in bartering offline as well. Hour Dollars, a Twin Cities organization that trades services between neighbors, was started by two St. Paul neighbors a decade ago. Interest in the group of about 100 people has been steady over the years, but in 2008 "we've had maybe 20 people" looking for more information, said Julie Seitz, who helps run the volunteer-operated organization, online at www.hourdollars.org.
For some, a down economy has nothing to do with bartering. "People can be very creative. That's what lured me into this Craigslist business," Mike Planthaber of Maple Grove wrote in an e-mail. The 24-year-old software consultant has traded DVDs, books and video games that before would have collected dust on a shelf. "I was done with the game, and I figured there was someone else out there in my position who hadn't played it yet, so why not trade?"
Psyck, who traded her truck for a car, is currently hoping someone will take her computer in return for a motorcycle. "I'm addicted," she said.
Kara McGuire • 612-673-7293
