‘Tis the season for tech layoffs, bonus cuts, and hiring freezes – the music has stopped, and the layoff contagion has begun. If you’re still dancing (switching jobs, pursuing startups), then better to grab a chair (aka “safe” job), preferably several chairs, than to go it alone with a single job. ‘OE’ is hands down the best way to survive a recession -– not career cushioning or quiet quitting. With that in mind, here are our top five tips to survive this recession and come out ahead.
#1 Diversify your income streams – the ‘OE’ way
A recession can be a difficult time for many people, as it often leads to job loss and financial uncertainty – remember the Great Recession? If you aren’t ‘OE’ yet, then you should get moving. That’s because the barbarians (layoffs) are at the gates, and all the smart people (‘OE’ folks) are already holed up inside the castle with multiple jobs. Don’t be that guy or gal who gets killed by financial ruin due to a layoff. Join us, it’s still not too late.
For the ‘OE’ folks, you still need to have a “survive the recession” plan. Like any good CEO and CFO, you should already plan for potentially losing 25-50% of your cash flows or jobs, right? After all, layoffs are just a numbers game and eventually your number gets called. So, plan for some loss of income scenarios..
To further diversify your income streams, consider putting your ‘OE’ cash into hard incoming-producing assets such as government bonds (as of this writing the 1-year T-bill is yielding ~4.7%, which is considered “risk-free”), rental properties, and dividend-paying large cap stocks (much riskier).
Alternatively, you can also start a side hustle like a podcast, vlog, or a startup. There’s also the option to land another job in a recession-proof industry, but more on that later on tip #5 below.
Finally, the best option of all, do nothing – stand still like the mountain and keep ‘OE-ing’. Just consider your risk tolerance and opportunity costs with each option. There’s no free lunch.
#2 Cut your expenses like a Scrooge CFO
After increasing and hardening your cash flows, the next move is to cut expenses like a Scrooge CFO. Start by identifying your biggest fixed, semi-fixed, and variable family expenses. For most families, common costs starting from big to small are mortgages, car loans, healthcare, school/daycare, utilities, and discretionaries like vacations, entertainment, and eating out. Once you’ve laid eyes on all your expenses, create a Plan A (frugal-light) and Plan B (heavy-handed) to start cost cutting.
Execute frugal-light Plan A
This is also what we affectionately refer to as our “work backwards” plan, starting with discretionary expenses. Got TV or music subscriptions like Netflix, Disney-plus, Pandora or Spotify? Cut them. Oh, got a gym membership you hardly use? End it. Go out to eat twice a week? Start cooking and eating at home. Simple enough.
You don’t need to get crazy yet, so cut yourself some slack if needed, e.g. don’t need to lower thermostat to 60-degree to save on heating bill, at least not yet. But use good judgment on where to cut some fat off your monthly expenses.
Dial up heavy-handed Plan B
You just got laid off from J2 and J3 – time to go ring the expense cutting alarm. Can you save some interest payments by paying off all your car loans? If so, do it. Did you save up enough from ‘OE’ to pay off your mortgage? Even better. Also, what discretionaries? It’s time to set the thermostat to 60-degree to save, literally and figuratively. Take advantage of “free” things, like a jog in the park, free movies and music with ads, and even visit the foodbank.
We did say this is the heavier-handed “crazy” cost cutting plan. Just don’t overdo it like not having any healthcare at all – that’s just stupid – unless healthcare is free in your country. You get the idea.
#3 Do the opposite of quiet quitting: working loudly
You know the ‘OE’ game – set low expectations. Now is the time to exceed these expectations by working loudly. Yes you heard me right. Time to shift gear and get ahead of the masses once again. While others are demotivated and worried about layoffs, you perk up and start exceeding expectations and potentially get promoted.
Because you’ve been ‘OE’ and selectively take breaks to improve your mental health, you’re not burned out like many quiet quitters. ‘OE’ folks already know how to set life-work boundaries. After all, isn’t that what quiet quitting is, knowing how and when to set boundaries? Now you can selectively be a tryhard and get ahead.
#4 Career cushion with ‘OE’ in mind for the market upturn
We all know hiring has slowed and companies have gone into what and see mode. But that doesn’t mean hiring managers aren’t “pre-interviewing” future candidates for when the music starts again and the good times roll.
However, ‘OE’ folks should do career cushioning carefully and not reveal too much. The point of career cushioning is to expand your network and soft-sell your skills and be top of mind for hiring managers and decision makers. For those who ‘OE’, this doesn’t mean pining for lower paying jobs during a recession but rather catching the next higher paying job wave.
Put it another way, the ‘OE’ sales cycle has become longer in a recession. Don’t keep blindly applying to jobs and hoping to land interviews like back in 2021. The market conditions have changed. Instead, switch to playing the career cushioning game with long-term OE in mind – land and hold higher-paying jobs in late 2023.
#5 Cash flow protection with recession-proof jobs
It can be easy to get discouraged during a recession, but it’s important to stay positive and keep an open mind. Look for opportunities to learn new skills or pivot to a new industry. Remember, recessions are temporary and there will be better times ahead.
One of our proven ways to survive a recession unscathed is by having “safe”, recession-proof jobs like working at government-funded local, state, and federal agencies, school districts, or non-profits. The beauty of these organizations is they’re often slow-moving in both work demands and firing non-performing employees. As long as you’re doing the minimum (or, is that quiet quitting?), you’ll keep cash flowing.
Some of these “safe” jobs won’t be as high paying as private industries, but then again that’s not the goal here. ‘OE’ folks are striving for a high TC/HPW (total compensation / hours per week) ratio with added cash flow certainty by having a couple of these recession-proof jobs.
Don’t just survive a recession, think like a CEO and get ahead
Wealth is all relative. Take your $600K income and live in an average neighborhood, and you’ll feel like a king. But go live in an upscale neighborhood, and you’ll feel poor and want more money. Same logic applies to surviving a recession.
When your J1 or J2 co-workers lose their only job, and you still have two Js, you’re getting ahead. You can put the extra money down on a second home or invest in income-producing assets to reach financial independence early.
Meanwhile, your laid off co-workers are panicking about their financial uncertainty and chances of jumping back on the job saddle. Capitalism is a cruel, competitive game, and don’t get caught thinking otherwise.
As former GE CEO Jack Welch once said, “never miss out on an opportunity like a good recession.” Meta and Twitter took the opportunity to do layoffs and clean house, so what will you do in this recession?
By following these tips, you can do better than survive a recession while being ‘OE’ – you’ll thrive and get ahead. Remember to stay calm and focused on your long-term ‘OE’ goals.