So, do you have a hard time letting go of an idea that may not be working any more?
Are you investing endless hours trying to make something (or someone) finally pay off?
Economists call this: “Sunk Cost Fallacy.” ( My Dad called it throwing good money after bad._)
The official definition of sunk cost fallacy is:
‘You make irrational decisions based on the future value of objects, investments and experiences.
And these decisions are tainted by the emotional investments you accumulate, and the more you invest in something the harder it becomes to abandon it.’
Here’s how to think of it in every day terms.
You have tickets to a play and you come down with the flu. You feel terrible. But you go to the play because you paid good money for it. And neither you ( nor anyone within coughing distance) will enjoy it.
Or you eat food even when you’re full because people in India are starving.
Or on business level, people will invest more and more money ( sometimes billions) into something because they think one day very soon their ship will come in.
Sometimes people stay in negative relationships that haven’t paid off for them emotionally spiritually or mentally for years. People who keep throwing love at someone who never reciprocates based on the idea that good actions will pay off eventually.
I have been stuck in sunk cost fallacy many times in my life.
My own private sunk cost fallacy, happened after my divorce. I had bought my house from my ex-husband and I thought I had gotten it for a good price. In fact I thought I had made an amazing investment. But when I went to sell it a few years later it was not worth nearly the price I paid for it.
The market had changed. It was 2008. You know the time when the economy collapsed?
My real estate agent suggested I lower the price.
But I wouldn’t budge. Instead, I kept sinking money into it. I got a new roof, a furnace, I painted the basement and landscaped. I kept sinking costs and time into the place, holding onto the misconception that more investment would get me my price eventually.
But “eventually” was not going to be anytime soon and the place was sinking me.
Finally, I was told by a friend ” You will never get your money out. Just sell that damn house and cut your losses!”
And as hard as that was to hear, I realized I wasn’t thinking logically. I was thinking emotionally. Which is really what sunk cost fallacy is about. Its an emotional reaction.
Eventually I lowered the price considerably and and the Sold sign went up on the lawn, the relief inside of myself was palpable.
Don’t get me wrong, there was a big loss financially but there was also the positive side I walked away completely free of debt.
I downsized and went on a holiday for the first time in years.
Months later, as I sat on the deck of my lovely two-bedroom rental in the woods and watched my landlord mow the grass, I thought, “Thank God, I am not a house owner. I don;t have to do maintain a house ever again..”
Letting go and stop sinking more energy into the house freed me up creatively and my health improved as well.
But it took me awhile to detach and and walk away.
How to Let It Go
First off you need time to sort out what’s going on.
So for thirty days or longer, try not to sink any more money or time in the thing or person you are concerned about. Take a little breather.
During that time make a pros and cons list of this venture,
If the only pro of continuing to do something is to feel better about the emotional investment you’ve made, clearly you should go in the other direction.
If the only pro is that you ‘believe you will make money in the future’ ( despite proof to the contrary ) then you know you should go in another direction.
Have you been engaging in Sunk Cost Fallacies? Please comment below. Or share with a friend who might need inspiration.
And speaking of inspiration,
The Power of Positive Event was a sold out success in Napanee. Thanks to those that came especially to those that organized the event. Special shout out to Rose Montgomery who sold tickets and brought so many fabulous people together.
Do You Need some Positivity? Stay tuned to the Wednesday Wit and Wisdom as I will be rolling out my Holiday podcast that will promote positivity. I will be telling heartwarming stories of staying hopeful over the holiday season. Email me for details if you would to treat your staff to the this Holiday Podcast and Training!
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