The Sky is Falling! Quitting Your Job During a Recession

Coming to a street corner near you!

“Plan for the future, that’s where you’re going to be spending the rest of your life.”

Mark Twain

A recession is coming. Depending on who you listen to, it’ll be here by election day or sometime in 2020. It was also supposed to be here already this year. Or was it 2017? Wait, maybe it was 2015. Remember when they were calling for recession in 2012, just 4 years after the Great Recession? Every year economists or newspapers warn of the ‘coming recession’ that lies just over the horizon.

After seven years of calling it wrong you’d think they’d give it a break. But they won’t — sells too many newspapers.

The point is, recessions do come around every so often. They’re a side effect of the business cycle. Borrowing and lending go too far and there’s a snap back. Economic repercussions usually include decreased spending, higher unemployment, tight credit or banks not lending.

So what to do if you’re looking to Quit Your Job or have already broken free?

The average person might fear recessions. They are, after all, times of great uncertainty. As someone in control of their finances, you should be excited at the opportunity that has presented itself. Prices fall in times of recession. Credit dries up, which leads to people spending less money (either because they don’t have it or would rather save or pay down debt), which leads to less sales and more inventory. The law of Supply and Demand tips the other way: demand drops and supply is more available, which brings down the price. In other words, things get cheaper because no one is buying anything.

The stock market becomes a super market sweep. When credit dries up, loans get called. This includes margin calls, where people and institutions that have borrowed money from brokerages to buy stocks and bonds are required to pay back the brokerage. Imagine you went ‘on margin’ in your E-Trade account, borrowing $10,000 and bought a bunch of Apple stock — the economy just dipped and AAPL stock is falling. E-Trade knows you borrowed money to buy a stock that’s losing value; they call the margin loan and you owe them $10,000 immediately. You have to sell your AAPL stock (likely other shares as well to make up the difference in value lost as AAPL stock fell). It’s not just you — hundreds of thousands of other people are being margin called by their brokerages and forced to sell.

If you’ve got cash, now is the time to buy. Over-leveraged (i.e., “bought with borrowed money”) investors have to dump. The stock market falls. Institutions like pension funds and hedge funds panic at the accelerating drop in prices so they sell stocks and buy bonds (generally regarded as safe havens during economic downturns). Them selling accelerates the stock market drop further. If you’ve got a rainy day fund of cash, you can swoop in and buy stocks cheap. When the recession ends and pensions and hedge funds move back into stocks, the prices go back up because they’re being bought. Something else to remember: a lot of stocks (particularly REITs) still pay dividends during recession. You can bolster your dividend ladder pretty well in a recession, adding to your portfolio of cash-paying stocks. Yes, your own stocks you were holding prior to the recession will likely take a hit, but will also likely keep paying dividends. REIT (Real Estate Investment Trusts) absolutely will.

Speaking of real estate, that also becomes another buying opportunity. The 2008 crash is a great example of this. Historically, real estate has always been regarded as a ‘safe investment,’ meaning value holds even during recession. However, recessions usually result in more inventory available in real estate. People who have unaffordable mortgages, suffer job loss, or end up moving due to economic downturn will either sell off their home or allow the bank to foreclose. Commercial property becomes widely available as sales dry up and force business to close or relocate. The more property that’s available, the lower the price goes. Again, law of supply and demand.

Recently, I read an amazing book called The Great Depression: A Diary (which I’m going to do a Required Reading post on), which is a published diary kept by a lawyer during the Great Depression of the 1930s. Throughout the entries over the years, the author bemoaned the fact that if he only had some cash he could buy up swaths of stocks, land, or businesses as they were going for pennies on the dollar.

Having cash when recession hits can set you up for massive future gains. As the old contrarian maxim goes, “buy when there’s blood in the streets.” It may be a bit melodramatic for this post, but the point is to buy when things look the worst.

So who is really at risk when recession time comes?

Employees, for one, at put at risk. If a company is forced to downsize or cut costs, labor is usually one of the first things to go (as it is usually the greatest expense). If you’re working a job and living paycheck to paycheck, you are the greatest at-risk. Loss of even a single paycheck will disrupt everything. Remember how hard employment spiked over the course of 2008?

Indebted people are another group at risk. Debt servicing becomes difficult if income drops or vanishes altogether. In some cases, banks can call a loan (like a mortgage) in the event of non-payment for a previously specified amount of time. Credit cards and personal loans will pile on interest and service fees for non-payment or late payments. Worse, if your income has dropped or you’re living on savings, huge chunks of your monthly income must redirect to debt, leaving you with less for other things. You might even be forced to sell things you don’t want to sell to satisfy debt payments.

Lastly, your business might be at risk. If you’ve read my blog in the past, you know I’m a fan of MJ DeMarco’s The Millionaire Fastlane and DeMarco’s advice of not starting a business based on what you love. You’re setting yourself up to fail if businesses aren’t founded on need. Businesses based on love — yoga studios or frozen yogurt shops — will be obliterated with the next recession. Thousands of etsy shops will close down. Endless side hustles will dry up. Why? Because as credit freezes and people lose their jobs and/or panic, spending vanishes. Subscriptions and memberships are cancelled. Penny pinching goes into overdrive — and these businesses will wither and die.

If, however, you founded your business based on market need, if you’re providing a valuable or even critical service or product, your business can survive. For some businesses, recession brings a boost. Bars and thrift stores thrive. The movie theater had its golden age during the Great Depression as people went to movies looking for escape and during the economic downturn of the 1970s, the Hollywood blockbuster was born. If your business is essential, it can weather the storm.

Back to the Mark Twain quote above. How can you prepare for the next recession if you’re planning to Quit Your Job?

The first one is easy, because you should have been doing it anyway to Quit Your Job: reduce debt. Pay down credit cards, pay off your car or student loan. Reduce your liability, the number of monthly payments, and the amount you need every month to meet bills.

The next best way to prepare is to have cash. Cash is your sword and your shield. You should have an emergency fund ready to cover several months of normal expenses. This will help bridge the gap and not disrupt your life should income drop or cut off altogether. In addition, having cash allows you to pick up assets at severe discount — buying stocks or property that will eventually regain in price. Just as a fun example, take Patrick Industries (ticker: PATK) company profile:

It manufactures and fabricates decorative vinyl and paper laminated panels; fabricated aluminum products; wrapped vinyl, paper, and hardwood profile moldings; solid surface, granite, and quartz countertops; cabinet doors and components; hardwood furniture; fiberglass bath and shower surrounds and fixtures; softwoods lumber; simulated wood and stone products; and others.

After the housing crash in 2008, the stock cratered to 28 cents per share. It’s obvious to see why, given its significance to home renovation and construction. From the low in March 2009 to the end of 2017, PATK gained over 24,000% in stock value. This is an extreme example, sure, but it illustrates how buying up something so unwanted could great gains in the future.

There’s a reason they say “cash is king,” and it has its roots in the Great Depression. At a time when everyone is selling assets to get cash, having cash makes your royalty.

If you want to learn more about setting yourself up to thrive in the next recession, check out some books like Recession-Proof by Jason Schenker or Recession-Proof Living by Bill Weise.

How Monopoly Teaches You Everything You Need to Know About Quitting Your Job

For many of us, Monopoly was the only financial education we had growing up (further discussion on this is coming in a future blog post!). The depression-era Parker Brothers (now Hasbro) board game was based on an even earlier game called The Landlord’s Game, designed to educate the players about taxes. Monopoly takes it a step further, educating the player (I was always the battleship or car) on cashflow, taxes, financial ups and downs (Chance!) and…jail.


As in life, in Monopoly the name of the game is assets. To quote from a well-known financial literacy advocate, an asset “is something that puts money in your pocket.” This includes stocks, real estate, or a business. To Quit Your Job, you must have assets. Let’s say you’re hired as a retail employee. You are paid a low wage because your only asset is your time. If you move up, or get hired into management, your assets include your time and skills or knowledge.

To break away from this, you need assets that generate income irrespective of your time. Stocks, for example, are an easy asset to obtain. Stocks can go up in value. Even better are dividend stocks, which pay out money to those that hold shares on a regular basis.

Real estate is also an asset. It retails value, the value can go up and then the real estate is sold at profit, or you can charge rent to put money in your pocket. This is the backbone of Monopoly — green houses and hotels. Both generate money for you as your car or thimble roam the board. In real life, you can purchase real estate to rent to create monthly cash flow. You can also purchase REITs (Real Estate Investment Trusts) and collect rent dispersed as dividends.

Businesses are a third type of asset. Represented in the game as utilities (Water Works, Electric Company) and railroads, businesses are a way of generating income (aka ‘cash flow’). A business is the ultimate asset — it can grow in size, become an excellent source of cash flow, and is tax beneficial. Even better, you can continue to collect your $200 GO! salary as a business owner.

To Quit Your Job you must have assets. Saving up a bunch of money and then quitting will only give you a long vacation. Eventually it ends with you having to go back to work. Bills don’t end — even if you own your home 100%, you still have taxes and insurance and maintenance costs. You still need to eat. Life also likes to come knocking at the door. You need income — and assets provide it.

At the start of the game, every player has some savings and a job (this is what GO! is, where you collect your $200 salary). You must balance your income (salary) early on while acquiring property and utilities. You can also save your income for later purchases. For those who don’t have a drive to Quit Their Job, they happily move around the board, trying to get to GO! as fast as possible – to collect their $200. Money is spent on things like Luxury tax and the occasional Community Chest mishap. They are happy not taking any risks with property and thus never get anywhere. In the context of the game, they will eventually be wiped out by landing on a red hotel at some point.

The winner of Monopoly is the one that ends up with all the assets.


Is cash an asset? Technically, cash can put money in your pocket through interest. However, in this day and age, most bank interest rates require a microscope to see and inflation easily wipes out any gains. But to Quit Your Job, you must have cash readily available.

Cash serves two purposes:

  1. Protection. In real life, you’ll inevitably flip that random Community Chest or Chance card. Hospital fees. School fees. It will be someone’s birthday and you have to give them $10. Also referred to as an Emergency Fund, you must have cash on hand when you Quit Your Job. Not having an Emergency Fund will require you to go into debt for sudden expenses, or sell assets like stocks to pay for it. Loss of assets or going into debt leads to going back to a job.
  2. Preparation. If you have cash, you can be ready to strike at any time. Imagine having a cash reserve when the 2008 crash started. Stocks and real estate (assets!) severely went on the cheap. By having cash at opportune times, it enables you to acquire assets at low cost. This is another facet of Monopoly: when another player is in desperate need for cash and looking to auction off a property, those with cash can scoop them up. Or if you already own Park Place and land on Boardwalk and not having the cash to purchase it. You just missed out on the biggest monopoly and biggest potential for cash flow because you didn’t have cash handy.


You want to stay out of jail both in the game and in real life.

It’s scary to think about how in the game, when you have nothing and you’re behind, that the best place to be is in jail. I’m not going to wade into the ‘poor people and jail’ arguments made online or in sociology circles, but there is an eerie correlation between this component of the game and real life.

Other Lessons

Overall, Monopoly is a great education in life. In addition to what’s been mentioned above, Monopoly also teaches about negotiating and compromise. There’s the wheel-and-deal component to it when it comes to trading properties and utilities. It’s also about accepting the randomness of life (I don’t expect to ever randomly win second place in a beauty contest) and the inevitable things ($75 Luxury Tax).

There is a reason Monopoly has been popular for 80+ years. The game is competitive, as is life. ‘Getting ahead in life’ is part of life. Whether it’s trying to get promoted, pay the bills, or Quit Your Job, Monopoly is the early childhood education in doing so.

And for all the realism in Monopoly, there’s always one thing that never happens: