Recently, I read about a business concept called the 'sunk-cost fallacy'. For example, if I spend money building my website for my company, that money is a sunk-cost. It's gone. Where this takes a wrong turn is when the product is bad--if I never get traffic, and therefore clientele, from my website, but I keep the site going any way, I begin to wade into the waters of the sunk-cost fallacy. I incorrectly rationalize that it's too late to dump the website because if I do, I'll lose everything I've put into it. But the truth is, it's already gone. That time and money will never be recovered--what can be saved is future financial pain. I can stop that by getting out now.
It reminded me of a real life bad investment of mine--a pricey vacuum cleaner. I bought the questionable appliance over two years ago. I saved both my money and gift cards and went to Target, picked out the model and color I wanted, and happily went home. That was the happiest I was to ever be with that damned vacuum. It doesn't work. In fact, it is worse than that--after it somewhat picks up dog hair and cat litter, it redeposits it onto the floor the minute you shut it off. But here I am, over two years later, still with my crummy vacuum because I spent so much on it. If I get rid of it, I lose my money. I am defeated! But you know what? I was defeated the minute I bought the thing. I lost my money years ago. But if I toss the thing today, I can save myself many future headaches and pointless vacuuming sessions.
The sunk-cost fallacy applies to so many things in life--relationships, jobs, you name it. We stick around because we think to leave now will be to forgo any possible returns we'll get in the future. If you're in a terrible relationship and have been for years, you hesitate to leave because you've invested so much time, and well, maybe things will get better and you will get the 'return' you've been hoping for. Instead, you're simply delaying the inevitable--you made a bad decision, and at some point you will have to face it. Just because you sunk a tremendous cost--whether time, love, or something else--doesn't mean you'll get a great return.
But you know what? That's OK. There is, in fact, a return on a bad investment. It's called "learning". Learn from your mistake. You need not go down with the ship; get to dry land and continue on.
Yes, it hurts to lose so much. It is embarrassing to fail. But if we tie ourselves to a "bad investment"--the job that is going nowhere, the long-term relationship with the wrong person, the money pit of a house, the failing business--we are not free to get into the right situation. And the right situation will come with the returns you've wanted so much.
