Unplugging to Reconnect: A Journey Toward Full-Time Homesteading - Finances, Part 3



Click here to read Part 1 and Part 2 of this series.

The Power of Barter and Seeing Holistic Value

Before the advent of the coin in any realm, there was barter. A return to this most ancient of transactional activity between people is one of the more interesting and profitable aspects of the finances of simpler living in the current era, in my opinion.

"What is so special about trading goods and services?", you ask. Well...for starters, you are likely to get more bang for you buck, particularly when you are talking services (after all, it costs you little more than time, sweat, and sore muscles to offer up some manual labor in exchange for some other needed product or service.) Looking at whole, 360-degree value versus one-dimensional monetary cost quickly brings the issue into focus.

Let me start with a recent personal experience involving a simple commodity-for-commodity exchange. On my part, I was selling for $6 a young cacao plant that caught the eye of another farmer's market vendor. That cacao plant was the result of me being gifted a cacao pod by a friend, sticking seeds from the free pod into some free dirt from my property that was contained in a free, plastic pot that we reused from a previous plant purchase. Left outside in the daily rains, in the tropical temperatures, the cacao sprouted with little effort and no cost on my part. The other vendor had chayote (including one that was sprouting), avocado, and a variety of citrus to offer. So...in exchange for my one cacao seedling (which cost me little-to-nothing in terms of money and labor), I was loaded up with arms full of fresh, organic produce, including one sprouting chayote that is now growing into a new food producing plant on my property. No currency exchanged, no transaction fees, no taxes, low carbon footprint on both sides. If I were to walk into a grocery store and purchase that same produce, the cost in terms of money would easily have exceeded $30. The real, total cost, in terms of carbon footprint or measurements of sustainability--while clearly and significantly greater--is more difficult to estimate. To drive the point home with an even more extreme example, more recently, a vendor offered me twenty pounds of citrus for a small packet of vegetable seeds that cost me, an authorized distributor, $1.50!

In another family example, my son recently performed some manual labor for aging neighbors--spreading mulch, planting trees, etc. In exchange, he was sent home with bags of shelled walnuts, which sell locally for upwards of $15 per pound (we love them, fully appreciate the nutritional value, and rarely eat them because we cannot afford them). In this case, if you look at pure monetary value alone, at the age of 14, he was making way beyond minimum wage. When you add in the nutritional content of his wages and the fact that the the little nut meats hold special culinary value for us, there is value that goes beyond the pecuniary.

Looking at this dynamic more broadly, let me pose another--albeit--theoretical example. Let's say that you provide one hour of labor to a neighbor--helping to mend fences, for instance--in exchange for one gallon of raw milk from a grass fed cow (a delicious, healthful, and nutrient-dense product that is rare in the typical grocery outlets of most parts of our nation). If you live in the price-fixed dairy world of Hawaii, where a gallon of pasteurized, hormone infused milk sells for $8 per gallon, the specialty milk described above would be completely unavailable to you in the store...it is, literally, invaluable in that context.

2/25/2015 8:52:15 AM

I was able to barter excess produce I had from my garden for fresh eggs another woman we knew had. It was not my best producing garden year, but we ended up with much more than I thought we would. Neither of us were selling at a farmer's market - we just found out what the other person had and were able to exchange to provide what the other person was lacking.

2/16/2015 12:18:34 PM

Excellent point. IRS guidance on the issue can be confusing, but the $600 trigger (per person involved in the transaction, per year) is oft cited in farmer's market and intentional community circles. Any tax experts who can add to this conversation?

2/13/2015 4:36:52 PM

I am an accountant, though not a tax expert, and I just have to mention that some types of barter transactions are considered taxable income by the IRS. I doubt they'll go after you for trading a jar of honey for a dozen eggs, but particularly if your labor/goods would be considered worth $600 or more (which is the limit for a business to report on a 1099), it could be taxable. Just posting as a The More You Know type of thing. :)

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