Whatever you did with your time…it’s a sunk cost.
Go over what you did this past year. What can you learn?
If you made an investment last year that’s clearly wrong, stop investing any more money in it. At the least: don’t keep spending if it’s just because you spent a lot on it.
It doesn’t matter if it was $1 or $5 Billion. It’s still a sunk cost.
“We spent so much on our health information system twenty years ago.” Yeah, but it’s horrid, and it’s costing so much. “It was a very expensive investment!”
Yes, expensive indeed.
If you gained weight or ate poorly or didn’t exercise all year, forget about it – they’re all sunk costs.
All those things you did are falling down behind you. Forever.
It’s what you can push up, bring forth and make happen from now that matters.
BUT…BUT…WE INVESTED BILLIONS ALREADY!
It’s an easy concept, but boy does it throw people off. Intelligent, bright and practical people often get caught on the fallacy of sunk costs.
Back in my days in corporate enterprise, for instance, I remember having to convince executives to drop capital projects that just never earned their expected return.
“This is a $25 Million dollar asset” they’d firmly remind me.
“No. This is a $25 Million dollar write-off” I’d respond. “We can’t recover our losses, there’s no supporting revenue stream and we’ll only continue to lose more in maintenance costs and equity injections.”
These were smart men. (Men, not women btw.) They were almost three times my age and 100 times more intimidating.
But they got it. They knew full-well what I was talking about. It wasn’t reason I had to wrestle. It was their emotional attachment to all that work in the past – those meetings, those endless pro forma revisions, those status updates from stressed-out and uninspiring middle-managers.
They overcame the emotion associated with losing, and that deep temptation to keep investing. Not to mention: a small dollop of soothing tax relief.
The psychology of sunk costs is one of the biggest weights on the status quo.
SINK OR SWIM
My point is this: it’s easy to believe that what you’ve done in the past – or the things that happened to you in the past – absolutely determine the choices you have to make.
Clinical Depression – in a way, and in mild endogenous cases – is often the result of getting caught on a sunk cost. Focusing on the present and moving forward becomes harder and harder.
Maybe that track you went down all these years just wasn’t the one you needed.
It’s your life – not the past’s.
Even grief of your past is an investment in your future.
Our investments – in financial instruments, marriages, passions, dreams, employers, health – don’t always work out.
You can dwell on the sunk costs of your life, or you can seek new ways to invest your resourceful energies.
Invest in 2011.
Invest in hope. Just make sure it’s not tied to a sunk cost.