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lucillle

Sunk costs

10 years ago

There is a concept in economics (which I took in college and that was a looong time ago) called 'sunk costs'.

These are costs that are already spent, and largely irretrievable. For instance, if you were going to open a restaurant, the repairs, licenses, and whatnot might be considered sunk costs. You wouldn't let the thousand dollars you had to spend painting the kitchen area be a factor in whether you were going to serve oysters or clams.

In macroeconomic theory, future decisions should be largely based on retrievable or changeable expenditures, not on sunk costs.

This theory has helped me quite a bit in the last few years, as I sold a larger home and moved into a smaller one, and had to get rid of excess stuff and clutter. At the beginning of the process, I hung on to a huge bedroom furniture set because it was so costly, and the same with a number of items such as clothing in a small size that I will not likely reachieve, and even if I did, my tastes have changed.

After thinking through sunk cost theory it was easier to get rid of all that stuff and I am very much happier in my small decluttered comfortable home.

I see a lot of sadness here about relationships with children that have deteriorated, and almost always there is the thought of the time and care and money one has spent on those kids. All of that is sunk costs. Your past sacrifices of time and money are not retrievable, and they are not going to make YOU happy NOW.

If there are happy memories, keep them. Everything else, put it in a virtual trash bag and put it on the curb.

Everyone has a limited life span. You can't do anything about sunk costs and you can't do much about the way people feel about you now. Invest in yourself and your happiness. Do what makes you feel better- garden, bake, go out to lunch with friends.

Every time your mind strays to those woeful past events, remind yourself that just as you wouldn't go to the curb and open a trash bag and look through the garbage, you aren't going to get weighed down by sunk costs any more.


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