The Motley Fool Discussion Boards

Previous Page

Personal Finances / Credit Cards and Consumer Debt


Subject:  Sunk costs Date:  11/10/2012  6:29 PM
Author:  yeilBagheera Number:  306403 of 310993

That's the business term for a thinking trap that catches many of us.
I see it in my thoughts and I read it here.
Maybe I realize I'm thinking "I should keep that coat, because I spent more than $100 on it" --
but here and now, the truth is it doesn't matter how much I spent on it, because I can't change that decision.
Any decision I make now (to clean, use, keep, donate, sell) needs to be based on current factors.
And if I decide to sell it, than my accounts today will reflect some income today.

[of course, when I'm contemplating my patterns of behavior, it's fair to judge whether I buy the right things and to count how many coats I have accumulated)

Here's a friendly story about what I'm trying to describe

Economists say things like this:
"costs that have already been incurred and that will not change with any of the specific choices now at the margin should be irrelevant to one’s decision"

looking at belongings with clear eyes
Copyright 1996-2016 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us