Ignore sunk costs

Decision making is a critical life skill. We all make decisions, all of the time, but we rarely put as much thought into the way we make decisions as we ought. There’s a number of ways the process of decision-making goes off the rails, but the one we fall victim to most easliy is the sunk cost fallacy.

Sunk costs are a trick of the mind. Our instinct is to see our current status quo as a set of investments in past decisions—we feel like we’re too invested in this career, this business partnership, or this plot of land to consider making new decisions that fly in the face of these “assets”. We see our decision’s “ground zero” reference point as the point in time when we made the original decision that led us here today—but unfortunately, all of that is just an illusion of time.

The reality is that ground zero is always our present moment. The fact that we paid a certain price (in money, time, or energy) to get to where we are now is irrelevant. Recognize your loss aversion for the irrational cognitive bias it is, and acknowledge all of the possible future outcomes you have in front of you—not just the ones that line up with your past decisions.

Don’t let your past decisions hold your future hostage. Ignore sunk costs. Ignore sunk costs. Ignore sunk costs. Repeat that over and over until it’s wedged firmly in your head. Then repeat it a couple more times for good measure. You’ll need it.

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