My dear child:
In a study run by some scientists much smarter than me, people were asked to imagine buying two ski trips. One cost $100. The other cost $50, and they expected to enjoy it more.
They then told them that both trips fell on the same weekend. Neither ticket could be refunded or sold.
Of the 61 people asked, 33 chose the more expensive trip. The one they expected to enjoy less.
They'd already lost the money. Now they were giving up the better weekend too (a thorough approach to getting your money's worth).
I recognize that kind of thinking. I've heard it in my own mouth: “I've put too much into this to stop now.”
It sounds responsible. But it tells you what something cost yesterday, without saying a damn thing about whether it's worth another dollar today.
It’s called the sunk-cost fallacy, I’m sure you’ve heard of it.
But here’s a tip to remember: you don't owe a bad decision the rest of your money.
Think of the club you keep renewing because the joining fee was steep. That fee is gone either way. The renewal still needs to earn its place.
Before paying again, ask: knowing what I know now, would I spend this NEXT dollar?
Something can be difficult and still worth continuing. Give me that reason. Give me what you expect to get from here. “I've already spent so much” tells me neither.
You can't choose again with the money that's gone. You can with the money that's left.
One thing I'd tell my younger self: I spent more defending some mistakes than I spent making them.
From the bookshelf: “Quit” by Annie Duke. On knowing when persistence has stopped helping you.
A tool on my bench: Before you renew, look at what you're still paying for. PocketSmith helps you see your accounts together. (Affiliate link. The letter earns a small commission if you subscribe.)
Yours sincerely,
