It’s best to let your sunk costs go.
I recently visited San Antonio, TX to see if I wanted to live there. It looked just about perfect on paper.
I paid for roundtrip airfare, car rental, and a hotel for several days. Shortly after arriving, I realized that San Antonio has somewhat high population density and a road system that resembled a pile of worms. I like simplicity and dislike chaos, so I knew it was not for me. Since I had some more time, I visited a smaller city nearby called New Braunfels.
I liked New Braunfels. It was simpler, less crowded, and had some of the amenities I look for. I began telling some people that I would likely move there. It would have been a mistake if I did.
New Braunfels was an okay fit, but not a good fit for me. It had some of the things I wanted, but there were small problems with everything. The basketball place had limited hours. I wanted open availability. It was peaceful, but creating a new social life there from scratch would be difficult.
Realization: Step One of Sinking A Sunk Cost
When I got home, I imagined my new life in New Braunfels, and it didn’t seem like what I really wanted. I was biased to move to Texas because I had spent time and money to investigate it. I looked for reasons to move there, and brushed aside all of the reasons not to move there. I was holding onto a sunk cost.
Then I thought about the costs if I moved there: expenses to move halfway across the country, emotional and mental stress from choosing the wrong place, and another round of costly expenses to move again to another place that better suited me, and time lost. That’s really expensive.
Whenever you fight to keep a sunk cost afloat, you will lose more resources to temporarily keep it above water. But they’re called sunk costs for a reason—you’re not getting it back! To avoid losing more time, money, and energy, you must recognize when a cost is sunk.
Three Signs of Sunk Costs
- It feels more burdensome than exciting. I gamble for fun and consider my losses as the cost of entertainment. The times I’ve lost the most money have been the times that I’ve tried to get my lost money back. I stopped having fun in those times and felt the burden of regaining my sunk cost. The feeling of burden can be a powerful emotional indicator that you’re best off forgetting the cause of your burden instead of trying to fix it. Even moving to New Braunfels felt like a burden, because I didn’t want the trip to Texas to be a “failure.”
- The downside is greater than the upside. You can’t avoid risk. Even those who safely sit in a chair all day face the risk of obesity and disease. The smartest approach is to choose the most favorable risk/reward opportunities. Think of someone trying to salvage a relationship with an abusive or otherwise unsuitable partner. The chance of them miraculously fixing it and living happily ever after is low while the risk of continued dysfunction is high. Their risk/reward of pursuing a new relationship with the lessons they’ve learned offers a much better likelihood of success (assuming that their partner was the real issue).
- It’s reckless. Trying to save something that can’t be saved is reckless. If it seems like you’re about to do something reckless, ask yourself if there’s a sunk cost driving the urge.
Life on the Other Side of a Sunk Cost
As long as you’re fixated on the sunk cost, you won’t be happy. Once you’ve identified that you’re holding onto a sunk cost, you can beat it by looking beyond it. You will see new and exciting opportunities all around you.
When I admitted that my move to Texas was to recover the sunk cost of the trip out there, I started looking again. My spirits lifted at the thought of finding the right fit. A few days later, I visited Vancouver, WA.
I loved Vancouver! It was only a 15 min. drive to the Portland Airport. It had a gym (with basketball) open 24 hours a day, 7 days a week. It had my favorite grocery store and restaurant within 5 minutes. It was close to a lot of social opportunities, but still relatively peaceful, quiet, and simple. I found an amazing apartment there that has an outdoor basketball court at the apartment! (Basketball is my #1 stress relief activity, so it’s extremely important to me.)
After visiting Vancouver, I couldn’t believe I thought about moving to New Braunfels or San Antonio. I’m not claiming it’s better than those places, only that it’s better for me. Now I’m genuinely excited to move in December.
In the midst of battling with a sunk cost, it can seem like a lose-lose situation. It did not feel good to admit that my expensive trip to find a place to live in Texas was unsuccessful. But once I admitted it and moved on, the burden was lifted and I was free to find something better.
That’s the thing about sunk costs. It’s not necessarily about letting go, it’s about finding something better… something that won’t sink.
