# Swell AI Transcript: MoneyMattersEP2.mp3

SPEAKER_02:
Chris Hensley is a registered representative of Cambridge Investment Research, Inc., a broker-dealer member of FINRA CIPIC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a registered investment advisor. Cambridge and Houston First Financial Group are not affiliated.

SPEAKER_01:
 The Houston Midtown Chapter of the Society for Financial Awareness presents Money Matters with your host, Christopher Hensley.

SPEAKER_03:
Good morning, everybody. You're listening to KPFT Houston, and I am Chris Hensley. I'm the president of the Houston Midtown Chapter of the Society for Financial Awareness, or SOFA. Our show today is Money Matters. And we have a great show for you today. Our topic is going to be bartering and trading. And we have a special guest, Kyle Sadler, who is the creator of BarterOnly.com. He will be joining us at the second section of the show to continue our discussion of bartering and trading. And with that, before we get started with that, we are going to, for first time listeners to the show, we are going to talk about who SOFA is and what we do. SOFA is a non-profit 501c3 educational speakers bureau and so our mission is to fight financial illiteracy. And we do that by going out to different companies, different organizations, different groups, really anywhere people already congregate and provide financial education seminars as well as health and wellness workshops. How do we do that? Typically when SOFA goes out and does financial education seminars, it's going to be at a brown bag type format. We are invited out by companies, organizations, groups. Sometimes the company will provide food. Sometimes it will be voluntary. People will bring their own lunches. We never have a problem with people not being interested. There is such a hunger for the types of topics that we discuss. Sometimes we will do one-offs where we will meet with a group in the after lunch or in the evening. We can always work around the needs of the company or organizations. One of the groups that we work with is a city organization and they can only get the employees all together at one time once a year and that's usually during a safety meeting. So those are going to be, you think about a city government, that's going to be firemen, police, 911 responders. So there's not a lot of times that you can get everybody together. But usually what they do for us is that they will piggyback us on to the end of their meeting. SOFA is very flexible about being able to work around your company and your organization. Who do we work with? Well, the people who attend our seminars are going to be the employees. They are going to be the members of professional organizations. But the person that we are usually talking to is going to be the HR manager. It's going to be at a company. It's going to be the program coordinator at a professional association. It might be the president of a professional association. So if you are interested in having SOFA come out to your company or organization, you can always reach out to us at www.HoustonMidtownSOFA.org. That website has our phone number, it has our email address, and you can get in contact with us. We would ask that you would introduce us to your human resource managers or the executive pastor at a church or at your professional association and we would set up a seminar or workshop. The other thing that we are really, really good at doing is when it is a company, often companies will have retirement plans in place. and they are actually required, any company that has an ERISA plan in place, you are required to have a financial education piece. Now a lot of times the HR manager is kind of outsourcing this to the 401k or 403b provider, but what happens is they come out and they do what's essentially an enrollment meeting. So they will show you how to get on their website, how to get started in that plan. But what's not going on is education and that is where SOFA is really, really strong. We do go out and we do retirement, we do investments, but we also do topics like cash management. We do topics like credit, getting your credit in order. We just got finished with April. That's going to be taxes. If you'd like somebody to come out and talk about taxes, then that would be a CPA. If you wanted somebody to come out and talk about estate planning and wills, that's going to be an attorney. So if that is something of interest, we also offer a free white paper. If you go to our website, it's called 360 Degrees of Financial Literacy. Simply sign up for the white paper. There's no charge for that and that will give you some information about SOFA, about putting a financial literacy, financial education program in place at your work or group. And with that, let's go ahead and get started on our topic today which is bartering and trading. And when I started in my head thinking about this topic, This really came up from a post that one of my friends put on Facebook. The post was an image. Let me see if I can paint this picture for you. In your mind, picture a large rectangle. And this large rectangle is going to be a phone booth. And it's not the phone booths that we have here in the U.S., but this is going to be the call boxes that you see all over England. If you are a Doctor Who fan, that's going to be the TARDIS. If you are here in the Montrose, if you go down to Kirby and Westheimer, there's going to be a replica of one of these call booths or phone booths there. And the image was one of these phones that was kind of gutted and they had put shelves in the phone booth and they had lined it with books and CDs. The text on the image said, take a book, leave a book. That kind of stuck with me. I'm an avid reader. I saw that image and it made me think, how does something like that work? I started researching and it turns out when you see anything on Facebook you never know if this is something real or what's going on with it. So I started researching it. And what I found out is that they have really made a decision to decommission these old phone booths and to take them out of the country. They're considered obsolete or old, and so they're decommissioning them. that owned these fumbus in a village near Wells decided to offer the village to either purchase it, they would come and pick it up, or they could purchase it for the equivalent of $1.50 in U.S. dollars. So that village made a decision to go ahead and purchase it. It didn't hurt their budget too much, it was only $1.50, but the idea was what can we do with this phone booth to make it, what's the most creative idea that we could come up with. So they held a contest and the winner of that contest came up with the idea of the phone booth being a book trading program. So the idea is to leave a book, take a book and I really like that. I like the concept of not having something before, leaving something that maybe you're done reading, a CD, a book on tape and getting a different book on tape. It's the same concept when you go into a gas station or a convenience store and you see the take a penny, leave a penny. As a financial advisor, I go back and I look and I always want to apply metrics to that. This is something that in the future I wanted to see, is this working? Because it's really using the idea of trust. It's really based on the trust system as to people coming back and swapping books out. But I really like that idea of trading books. So that got me thinking about bartering and trading. The other thing that popped into my head when we got on to this topic was when was the first bartering or trading story that you had? When did that happen? I know there are lots of them but the one that pops into my head is When I was in fifth grade, I really, really wanted to get a metal detector. I asked for it on my birthday, I asked for it on Christmas and I never got it. I suppose probably because my mom was thinking, well what does a fifth grader have to do with a metal detector? Well, I kept looking and looking and wanting that. I ended up meeting somebody in my science class who had a metal detector. Now the metal detector that he had was a cheap knockoff. It was a Radio Shack. It was a kid's version of a metal detector so it wasn't as glamorous and as beautiful as I pictured the metal detector in my head. But I talked to this kid and I said I really wanted a metal detector so I ended up trading him my bike. And if you're a kid and you grew up in the 80's you know your bike was everything. So I traded in my bike. When I went home that evening I ended up getting in trouble. A lot of trouble because I think the bike was probably worth at least a couple hundred dollars. The metal detector was not worth that much and I got in trouble for that. But I remember thinking I was very excited about getting the metal detector and I was more excited about the metal detector than the bike. I'd like to tell you that I was able to go out and find a lot of treasure and cash and that the metal detector paid off, but I think in reality I ended up finding a bunch of junk, some nails, some rusty cans. So, it probably didn't pay off on that end, but what it did pay off on is really the fun of seeking out, hunting for treasure as a kid at that age. That was way worth more than the metal detector. So, it really makes you think what value is and what people place a value on. And with that, we're going to go ahead and take a short break here.

SPEAKER_00:
Walking down the main track one night I met a fine chick who felt just right She stopped when I passed my road I told her she could have all of my gold She turned around and with a frown Said this ain't no circus and I don't need a clown Your cash ain't nothing but trash Your cash ain't nothing but trash Baby, it ain't no need in your hanging around Just to make a hit with a bad chick I tried to get a Cadillac right quick Friends got nine hundred bucks and some change We disagree, I tried to please You said I ain't a chicken and I don't need your fees Your cash ain't nothing but trash Your cash ain't nothing but trash Your cash ain't nothing but trash Baby, you're crawling way past your speed Da-da-da-da-da-da-da-da-da Da-da-da-da-da-da-da-da-da I tried to get away but you slowly clocked me and took all of my dough. I heard him shout as he cut out. Ain't lost nothing once you're crowned a boss. Your cash ain't nothing but trash Your cash ain't nothing but trash And he took my watch and I passed out I woke up in the arms of I need stop, the judge swung his fist down Plunk, plunk, twenty dollar fine cause you're drunk Dig up the door and you can go All I had was a buffalo You can't see nothing but trash You can't see nothing but trash You can't see nothing but trash But I'm sure I'm gonna get

SPEAKER_03:
And we are back. For those of you just joining us, you're listening to Money Matters. Our topic today is bartering and trading. And we're joined here live in the studio with a very special guest, Kyle Sadler, the founder of a recently launched website called barteronly.com. Now, Kyle has spent 18 years in the financial industry, and today I've asked him to discuss bartering. So please welcome Kyle Sadler to the show.

SPEAKER_04:
Thank you, Chris. I'm blessed to be here.

SPEAKER_03:
Kyle, now when we talked, we talked about the idea of doing a show around the topic of bartering and trading, and you talked about some of the history of bartering that I had never heard before. Could you share some of that with us?

SPEAKER_04:
Well, Chris, you know, you're not alone. Most Americans, most people don't realize that up until about the Great Depression, or the end of the Great Depression, bartering was the essential function of all of America. Actually, our forefathers, whenever they came to America, the early settlers, they didn't have a cash, they didn't have a monetary system other them what they had over in England. So they traded for the most part. Well, you know, then we as we established ourselves as the United States kind of got away from it, but we reemerged back during the Great Depression, because people would actually need to go out there and work and trade that just for food. They didn't have money back during the Great Depression, so they were trading, they were bartering, and that's just in America, in the United States. However, the majority of the world is still on the bartering system because of the stability of a country's economic system and their currency. These countries or these people that live in these countries are having to use bartering as a common function. Community members will take their products, animals, trade skills to a market to exchange. My wife and I do mission work in Peru and we've been down there many times and yes they want that American dollar but they also will sit here and they will trade in a heartbeat for any essentials. We'll take t-shirts, we'll take whatever disposable item that you can think of, we take down there just to trade. However, with the advent of the internet, there has recently become a resurgence of bartering and trading in the United States because now it has made it easier for individuals that they don't have to haul their animals or their crafts or products to a marketplace. They can just simply post these items online and they can do one of two things. One, they can be proactive and send out offers to other individuals or they can just be passive and wait for offers to come in.

SPEAKER_03:
Wow, that sounds kind of like it's taking bartering from the old time to the new time and really kind of modernizing it. Now Kyle, what I'm interested in is how did you get started bartering?

SPEAKER_04:
Actually, I'm pretty sure like most people it started in the lunchroom when I was a child. My mom would pack that healthy, nutritious apple and then I would see some other kid's lunch and they would have jello pudding in it and by golly I would have to trade for it. Actually, I've been bartering my whole life, whether it's been trading baseball cards as a kid, or negotiating with my sisters growing up, or trading stocks and bonds in the financial industry, or better yet, trading players on my fantasy baseball team. Bartering has always been an essential part of my daily life.

SPEAKER_03:
Now, for the listeners out there who have never bartered, this is something I've done before and you've done before, but for the listeners out there who have never had any experience bartering, how does one really get started? Also, is it a really complicated process, I guess?

SPEAKER_04:
I'm actually glad you asked that question because I get asked those questions all the time. And let's go with the second part first because that's the most popular question I get or the most popular statement. Someone will sit here and say, I don't know how to barter. How do you barter? Well, let's take a look at this because actually you barter every day. Chris, you walk into a store and you locate the item that you wish to buy. Okay, and so you take that item to the counter and then you trade a piece of linen cloth paper that happens to have a numeric figure written on it for that item. The fact of the matter is, that's just a piece of linen cloth paper, which is only worth what the government that backs it, prints on it. Due to the fact of an unstable economy, this is why the majority of the world utilizes bartering as a centralized form of living. So is bartering complicated? No. We do it every day. We just don't think of it trading two cows for a pig or two sheep for a pig. We don't have the number two spray painted on the side of a pig. Now, as far as getting started, there's two major ways that if you really wanted to get started in bartering. There's swap meets that go all around the United States, all over the world. I mean, there's always a marketplace where you can go to trade days or swap meets, and you don't have to pay currency at these swap meets. That means that you're hauling around your goods, your items to each one of these places. So what I just say is let's make it easier and instead of hauling it around to places, posting it online to websites such as barteronly.com but for those that are beginners in this I would encourage everybody to go to the website because we do have trading tips and you know in the interest of time this will you know answer the question a lot faster if they just go out there and look for the trading tips tab.

SPEAKER_03:
Sure, sure. I actually logged on to the website before the show and I really liked it because it's right up my alley. I know it's free to register to get started on it. As a financial advisor when we go out, when SOFA goes out and we do talks about financial education topics in the Houston community, one of the questions we get asked the most is how can we reduce taxes. Now when it comes to bartering and trading, how does state and federal taxes play a role in that.

SPEAKER_04:
Let me address the easiest one first, and that's state sales tax. When a trade occurs, there are no sales involved. Hence, no state sales tax. Your listeners may be sitting here going, wait a second, how does that work? Let me give you this example that is a very common example that a lot of listeners can identify with. You have a vehicle that you want to buy. The dealership tells you to bring in your old car and trade it in. You receive a sales tax credit. Well, it's not really a sales tax credit. You see, Chris, by law, you only have to pay taxes on what you purchase, not what you trade. So see, there are no sales tax in trades. There is a lot of controversy when it comes to the federal income tax.

None:
But you have to realize it is income tax.

SPEAKER_04:
Whenever you're trading, you're not receiving an income. You're trading an item in for an item. See, me personally, I always say that it's an ongoing part of the taxation system. And so therefore, my opinion is that if there's no cash involved, then there should be no taxation. Now, I do want to state that I recommend anybody speaking to a qualified tax professional.

SPEAKER_03:
Thank you, absolutely. As a financial advisor, I appreciate it.

SPEAKER_04:
Yes, because those are the individuals that are going to be defending you in an audit. Now, let me give you an example here. We all heard about the kid that went out and traded a paperclip and traded up for a car, okay? We all heard about that kid. Now, The controversial part is, should he have been paying income tax on each one of those trades? And there's no income that's involved. He traded one item for another item. But then what ended up happening is finally he got that car. He started from a paperclip, got to a car. Well, now where is the income tax come in? If the kid sells the car. Because then, if he sells the car, he's going to receive cash. And therefore, his cost basis in that car is the value of the paperclip. So yes, he would have a capital gains tax on that car, or on that difference. However, how do you tax something that is all based on opinion?

SPEAKER_03:
True. Okay, that makes a lot of sense. Definitely, at a minimum, it's a gray area and to me it sounds like something that is really interesting. We could do a whole show on this, but to share with the listeners, as a financial advisor, at one point me and my wife, who is also in financial services, took a hiatus from the financial services industry and we did a full-time eBay business. So the next question here, there's been recent attempts to pass laws to tax internet sales sites like eBay. Where does bartering and trading sit in regards to that?

SPEAKER_04:
Well, shhh, don't tell our legislators this, but everything that is being discussed in Austin or in Washington D.C. regarding sales tax, it does not mention anything about trading. Heck, even the gun control controversy that's going on right now, they have yet to say anything about bartering. So I just tell everybody, let's keep it on the hush hush. So don't say anything on the radio that they're not even paying attention to a bartering website. So what I say is long live the trade.

SPEAKER_03:
Absolutely, absolutely. Now can you tell us how people might trade either as a business or a way to stretch their hard earned cash that you already have? I get a lot of people that I meet who are looking at ways to supplement their income even if they have a full time job, ways that this might benefit them.

SPEAKER_04:
Well, let's look at this as an example. Let's say, Chris, two years ago you went out and you bought $1,000 worth of painting equipment because you wanted to paint your own house. For the past two years you've had the intention to paint your house but you've never done it. Finally, reality has set in and now you realize you don't have time to paint. You can do one of two things. One, you can sell the equipment and pay a painter or you can trade the equipment for a painter to paint your house. Let's look at selling the equipment first. Let's say you go online and realistically what would you get for that painting equipment? You spend a thousand, most likely you'll probably get four to six hundred dollars because everybody goes online to find a deal. okay now if you're lucky somebody's gonna purchase it now tell me Chris who do you think is going to buy that equipment somebody who needs painting equipment like a painter a painter exactly okay so now let's look at another way now let's say a painter comes out and quotes you the cost of a thousand dollars to paint your house Now, let's look at after that painter has taken out all of his taxes that he has to pay to the federal government, the painter would net somewhere in the ballpark of about $690. That's after all the self-employment tax and regular income tax. Therefore, it would behoove both parties to trade it. Because an individual would end up actually paying an extra $400 to $600 to pay the painter to come out and paint the house, even after selling the equipment to that same exact painter. And then the painter would have to turn around and report the income and pay $310 to the government. On both parties, they get an equitable value. However, the bonus part is the painter gets that equipment and can utilize it to increase business going down the road. I hope that your listeners take away today that you look for those opportunities not only to save money, but also how to make more money.

SPEAKER_03:
Absolutely, absolutely. Now, I know we're right. We've got just a few more minutes here, so we're right here at the end. I wanted to thank you for joining us today. If the listeners would like to contact you or really find out more information, I know the website is easy to remember. It's barteronly.com. Do you have any parting thoughts that you'd like to leave us with about this?

SPEAKER_04:
Well, Chris, I just want to thank you for allowing me to come on your show, and I want to leave your listeners with this. The greatest aspect of bartering can be found in our company's beliefs system that I kind of have hinted around this whole time. One man's junk is another man's treasure. See, on barteronly.com, we have a slogan, trade for need, trade for profit, trade for fun. Because everyone falls into one, if not all, of those categories. Need, profit, fun. So I invite everyone just to go try bartering before you think about throwing out someone else's treasure.

SPEAKER_03:
Thank you, Kyle. I appreciate it. We are right here at the end. I just wanted to leave a parting kind of a teaser for next week's show. SOFA was out at Baylor College of Medicine the first week of the month there for an entire week of getting fiscally fit, different financial fitness topics. And short of taking you there with us, we have got coverage of some of the questions and answers from that. So please tune in next week and we are going to say goodbye to you for now. Join us next week at 10 o'clock and we will be joining the BBC already in progress.