In Economic Downturn, More Turn to Barter

Call it a sign of a dismal economy and struggling financial system: the resurgence of barter.

Bartering, or the exchange of goods and services without money, has become a more common solution as family budgets tighten. In July, consumers listed nearly 142,000 ads on the barter section of Craigslist, a 96% increase from the year before, according to site statistics. Other sites report a shift in the things traded. "Before, it seemed like people did it casually as a way to recycle unwanted stuff, like kids' clothes," says Jessica Hardwick, founder of bartering site SwapThing.com. "Now it's more out of need." Recent listings requested back-to-school essentials like backpacks, textbooks and even uniforms.

While approaching the mechanic about exchanging a weekend of pet-sitting services may seem absurd and a little creepy, most people are already familiar with the basics of such tactics. "We barter in other ways all the time," insists Jeanne Hurlburt, a professor of sociology at Louisiana State University. "If I give you something, I expect a favor of equal or greater value in return. Every relationship has give and take." You might mow an elderly neighbor's lawn in exchange for some tomatoes from her garden, for example, or swap must-read books among friends with similar tastes.

Online offers run the gamut from piano lessons in exchange for size 10 shoes, to a gym membership in exchange for help moving. Home swapping -- where families trade places for a cheap vacation -- is also rising in popularity.

Here are five tips to snag a great deal on the things you need, using goods and skills you already have:

A host of free bartering sites make it simple to find other consumers and businesses open to bartering. Check out offerings -- and post your own -- on sites like TradeAFavor.com, SwapThing.com and JoeBarter.com. And of course, there's also your nearest city on Craigslist.org.

Think of it like bartering with training wheels: try trading first with family, friends and others with whom you have already established business relationships, suggests Hurlburt.

"It makes sense to use that social capital," she says. You can be more certain that the exchange is fair and worthwhile.

Whether a trade makes for a good deal is largely your opinion, says Mary Hunt, founder of money management site DebtProofLiving.com. But it helps to get a sense of the cash value of a given product or service before making or accepting an offer. Price compare goods online, and call locally to find out the going rate for services from housecleaning to piano lessons.

Finding someone to trade the latest Janet Evanovich novel in exchange for another popular mystery is a lot easier on a specialty site. For books, CDs and DVDs, try swap sites like PaperBackSwap.com and Peerflix.com. Another popular trade: swapping your home for someone else's as vacation lodging. "It's a great way to save money," says Anne Banas, executive editor for SmarterTravel.com. "There's no cash transaction. You stay in their home, they stay in yours." She recommends using KnowYourTrade.com, which lists and rates home exchange sites.

Technically, bartered transactions are taxable, but there's little point in reporting them unless they're replacing income you might have otherwise received. "It's hard enough for [the IRS] to track the cash economy, and bartering is one step removed from that," concedes Tom Ochsenschlager, vice president of tax for the American Institute of Certified Public Accountants. Talk to your accountant or financial advisor about when it's appropriate to document trades.