188-Avoiding the Sunk Cost Fallacy by Applying Zero-Based Thinking
Radical Personal Finance · Joshua J. Sheats, MSFS, CFP, CLU, ChFC, CASL, RHU, REBC, CAP
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Show Notes
Years ago, I learned an extremely valuable thinking process from Brian Tracy called Zero-Based Thinking. Today, I share it with you.
Here's the question: Is there anything in your life that, knowning what you now know, you wouldn't get into again today if you had to do it over?
If the answer is yes, then you follow up with these questions: How do I get out? How fast do I get out?
By consistently applying this question to every area of our lives, we can avoid much of the impact of the sunk cost fallacy. As humans, we tend to want to keep doing something because we've invested a lot of time, money, or emtion into it in the past.
But, for the most part, those costs are gone. They're sunk. You can't recover them.
Rather, you have to zero the decision out, ignore the past, take the information you have today and determine if you want to continue what you're doing.
This type of thinking can be extremely challenging and freeing.
I hope it's a useful concept to you!
Joshua
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