Barter -- Old-fashioned, but effective

Tomorrow, I will head off to one of my numerous part time jobs. This one differs from the rest in that I don't receive a check. That's right, the good old-fashioned barter system at work -- have you tried it lately?

Last year, I got the opportunity to work in the office at the music school where my children take lessons and was to receive both an hourly wage and a 25% discount on lessons. With four kids taking piano, that made one child free, which is a great deal. Unfortunately, the economy being what it is, and music lessons being a real luxury, the school was unable to pay me starting this fall. I offered up the option of barter, and was immediately taken up on it. If you look at the barter system, it can equal real money on the the part of both people, the school is getting quality work for no cost, while my kids get quality lessons at a reduced cost to me. So far, the system is working well for both parties.

Now, being my financially creative self, you can imagine that the barter story does not end there. The value to me for the school year is nearly $1,300, but I got to thinking about what would happen if the barter option dried up? I have no reason to think that it will, and believe that the hourly wage may even return at some point, too, but I tend to be cautious with money. I decided that in addition to getting the discount on the lessons, I would also pay myself out of the kid activity account, assuming that I might someday have to come up with the actual cash.

Based on made up, somewhat complicated math, I settled on paying myself $40 per week for 40 weeks, which is a little longer year than the music school year, and a higher rate than the hourly wage I was receiving. If all goes as planned, I will have $1,600 come next June, which is more than a term worth of lessons in the bank, as well as a profit of $300 in additional savings. It has been a little dicey lately to have enough kid activity money for all the fall start-up costs, but I have been able to manage things so far.

I love the idea of paying myself, hiding money away, and creating any extra savings that I can. Between the barter, and the other paying part time work, if I save it all, I am going to be able to take the family to Disney World, or redo the kitchen, or pay for the braces. We may not be in the same position financially as other people we know, but we are trying to have a little bit of fun with the challenge!

A Little Savings goes a Long Way

My dad tells a story about a colleague of his who lived paycheck to paycheck for years, always worried about the next disaster. One day over coffee, my dad and some others got to talking about the value of saving just the littlest bit of money, ten dollars a paycheck, and putting it into a savings account. This guy thought they were all crazy, $10 would never amount to anything, but somehow they all convinced him to give it a try. To this day, I have no idea why he tried it, whether it was an attempt to prove people wrong, just the right moment, or an act of total desperation, but this man started putting $10 a pay into a savings account, every two weeks.

Time marched on, with the occasional comment about the increased balance in the account, maybe particular notice of milestones of $50 or $100. At some point that year, they all received a small raise and discussed how much could be added to the savings rate from the raise. After all, you were fine before, you won't miss what you didn't have. The man added a bit to his $10 per pay, and the account kept growing. Months passed.

Imagine the shock of my father and the others when, one day, the recent saver came in to the break room, sat down, and said, "My savings account is empty." Knowing my dad as I do, I can see the look on his face, and imagine the reaction as somewhat close to having a heart attack! How could this have happened? This colleague had done so well for so long, what could have cause this slip?

The man said to all his friends, "Wait, you don't understand! My hot water heater died over the weekend. I walked into the store, and I paid for the new one with cash. I have never in my life had the money to fix a problem like that with cash."

Listening to my dad tell that story, you can hear the pride in his voice for his friend's success, you can feel the saver's pride in himself, you can have your own lightbulb moment that a little savings can go a long way. 30 years later, I have never forgotten the lesson.