moneyFYI
Financial Freedom Is Merely Organized Common Sense
Don’t Fall In Love With Old Decisions
There is a concept in business, finance, and life called “sunk cost.” It means the money or effort has been spent and cannot be recovered. It isn’t a problem until something better comes along, and you must write off the old decision and move to the better choice.
The resistance is simple.
- The analysis is persuasive; if you don’t stay competitive, you risk more than money.
- I have not earned out on that decision yet.
- I can’t just walk away from it.
- I hate losing money
- There are more, but they are usually emotional.
The reality is you optimize from the present forward, and decisions you have made in the past are just clutter in the process.
In some ways, it is like the poverty syndrome, where people keep useless things because they are better than nothing.
The simple guiding thought
It applies to more than business decisions.
“Never be so sure of what you want that you would not take something better,” Chris Voss.
Think about it a little from time to time. Every time I do, I think of a used car dealer client whose mantra was the key to his success. “Don’t fall in love with anything in inventory.” He recognized that the money was made on the turnover, not the markup. If someone offers a reasonable price, take it and get another car for inventory.
With people and decisions, recognize that decisions get dusty and sometimes must be replaced with something better. Revisit old decisions. Some have outlived their usefulness, regardless of how well they worked in the past.
Constant improvement makes for an easier life.
I build strategic, fact-based estate and income plans. The plans identify alternate and effective ways to achieve spending and estate distribution goals.
Be in touch at 705-927-4770 or by email at don.shaughnessy@gmail.com.
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