In Essentialism; The Disciplined Pursuit of Less, author Greg McKeown talks about common phenomenon called “sunk-cost bias.”
“Sunk-cost bias is the tendency to continue to invest time, money or energy into something we know is a losing proposition simply because we have already incurred, or sunk, a cost that cannot be recouped. But of course this can easily become a vicious cycle; the more we invest, the more determined we become to see it through and see our investment pay off. The more we invest in something, the harder it is to let go.”
I know I’ve been there. But I just spent $1500 on a new transmission – surely I have to spend another $1000 on a new radiator. No, maybe it’s time to stop investing in that bucket of bolts and use the next $1000 on a better vehicle.
Several years ago a relative of mine asked my advice on his accounting business. I looked at his books, saw the hemorrhaging of funds each month for his staff and fancy offices and made my recommendations. That was to go into the office late that night – take his personal computer out, lock the door and never go back. He was mortified – this was his business, his baby. His name was on the front door. Eight months later he filed bankruptcy, exposing the 18 credit cards where he had accumulated over $98,000 in debt as he attempted to keep his losing proposition alive.
This is a great time of year to take a fresh look at what we are investing time, energy and money into. Is there something where it is only the “sunk-cost bias” that is keeping you involved? It may be a car, a job, a business or a house. Sometimes the overwhelming sense of peace about removing the __________ is confirmation it was indeed time to bring it to a close.