You’re Not Staying Because It’s Good — You’ve Already Paid

You're not staying because it's good.

You're staying because you've already paid Well, hello my friend.

Welcome aboard to The Daily Podcast.

My name's Jonathan Doyle.

I'm pleased you're here.

Today, I wanna share with you some insights on the sunk cost

fallacy and how this relates to your life, and how understanding it

can really help move you forward.

Some of you will be familiar with this.

If you are not, the sunk cost fallacy is a fallacious belief that because

you have already invested X amount of money, time, or energy into something,

then you mean you need to keep going because you cannot admit the defeat.

You cannot admit that the strategy was ineffective, and it's too hard

for humans to just face up to that reality and let the loss be what it is

and move on to the next thing in life.

It's a very human thing where we value much more what's already gone

in, what we've already lost, than the realization that we are going to keep

paying indefinitely if we don't stop.

So I remember years ago watching that show Grand Designs.

You ever seen that?

That architectural show, and people build those houses and, uh, I

remember when the kids were little, we used to watch a bit of that.

And I remember one episode, this guy was building this phenomenal

place on a cliff over the ocean.

It was just remarkable, but it just kept blowing out and blowing out and blowing

out, and there's just stress and problem and architectural engineering issues.

And the kinda closing sequence of that episode was, uh, it cost him

his marriage, and he almost basically went broke, and it's not finished.

It's just sitting there, and the sort of the episode finishes with this

forlorn-looking, half-built, m- you know, palatial thing on a cliff with no one

there, and the road's all blocked off.

So it's a really interesting insight into the sunk cost fallacy.

So this is a guy, he's a good guy.

Like he's, you know, wanted to build something absolutely extraordinary

for his family, but there was just problem after problem, and money

kept going and going and going.

And then it was obviously relational stress.

So you can see that he is sinking all sorts of costs into

this program, financial costs, relational costs, emotional costs,

and it's not coming together.

So there comes a point where it is wise to revisit that original

strategy and goal and ask some very, very difficult questions, but he's

not able to, for whatever reason, and so the cost accumulates and

eventually kinda wrecks him in the end.

So for us, the question is to do the audit.

We talk about audits so frequently here on the show, but to audit our

own lives and say what areas are we continuing to put energy into that

may have long passed their use-by date and their effectiveness date?

So maybe we could put these into some categories, because the

obvious one is relational, right?

Like, you might be in a relationship or a friendship that is very stagnant or

even possibly even harmful, but you're thinking to yourself, "Well-" You know,

I've been in this relationship so long, or I've been in this friendship so long.

Now, let me just clarify, this does not apply to marriage.

Marriage is a covenant.

I've been in one for t- almost 26 years.

So once we make those lifelong commitments, we need to stick with those.

But there are other relationships and friendships that maybe are not serving us,

but the risk is, oh, it's too much trouble to just sort of, to put an end to this.

And so we can go on sometimes for days, months, weeks, years, allocating

emotional, relational resources into things that are no longer serving us.

I don't mean that to sound selfish, like we're utilitarians, that we just

kind of allocate, you know, we relate to people based on their benefit to us.

But come on, we've all lived long enough to know that there can be friendship

groups and people that occupy our time and our energy that are no longer serving us.

There can be careers that are exactly the same way.

Maybe you went into university or college, you went into a particular

profession, you never really liked it, but maybe it's safe.

Maybe it's safe, and you've been doing it for a long time.

You know how to do it in or out.

You've thought about changing, but you don't wanna change

because of the sunk cost fallacy.

Because you're like, "Well, I've always done this, and this is a,

I've put so many years into this, and my whole life's been this." But

there's this little whisper, right?

Which is like, "Yeah, but you could do this. You could try

something else." And we don't do it.

So the kind of mechanism of this is when you've sunk something into something,

whether it's financial or emotional, psychological energy, the question

isn't, the, the way out of it is not to ask yourself, "How much have I lost?"

The question is to ask yourself, "What's the value of the next dollar?" That's

the, that's how this stuff gets taught.

What's the value of the next dollar?

So if you're constantly putting money into an investment that's doing

badly, like, the problem and where we get stuck is all we, all we focus

on is the size of the loss, right?

Makes sense.

It's like, well, I invested in this and I've lost this money and, and if I just

stick there long enough, it'll turn around and… But the question is not so much how

much have you already lost, the question is how much more do you want to lose?

How much more do you want to lose?

So I invest, uh, I've been an investor for quite a few years now, and I trade

markets, and there's been plenty of times where I've caught the elevator

up and I've caught the elevator down.

And there was one recently where there was significant, uh, capital involved and

there was some significant geopolitical events, and I'm riding that elevator,

and the question I'm asking myself is, what am I prepared to lose here?

Like everybody wants to focus in investing on what's the upside,

but the question that I had to work at that time was, w- we-- in, in

investing we call this stop loss.

So you, when you're placing trades, you, you use what's

called stop loss indicators.

So you, you put a point where you wanna stop the loss.

I don't use those because, I mean, I'm aware of them, I know what they

are, but I hold them in my head.

The, the reason we, that, uh, some investors avoid using them

is sometimes the markets can read them and anyway, they'll just,

they'll wipe you out in a second.

So but the idea of a stop loss is kind of like, well, where am

I prepared to stop the bleeding?

At what point will I get out of the elevator?

And so the question becomes, what's the size of the loss

you're prepared to tolerate?

Because the real question is, where do I go next?

Wh- what am I gonna do from here?

What, what's the next choice I'm going to make?

So look into your life.

You know, it can be the gym membership that you keep paying for, but you don't

go, but you don't cancel it because you're like, you, you don't want to

admit to yourself how much you've lost.

It's like, "No, I'm not gonna cancel it because I will go."

And I'm like, "Yeah, but you've already lost like seven hundred dollars this

year by not even going once." So we focus on how much we've lost and how

much we've already spent, so we keep ourselves in that loop thinking, "I'll

just, I'll just hang on a bit longer.

It, it'll change.

I'll, I'll get to the gym.

I will."

But the question is, what's the value of the next dollar?

What's the value of the thing you could be doing if you finally accepted that

some place that you've been allocating financial, emotional, psychological,

spiritual energy is no longer serving you?

And you'll hear it in questions in your head like, "But I've always done this.

This is what I've always done," or, you know, "What if things turn

around?" Yeah, but it's pretty tricky to live your entire life based on,

you know, the possibility that things might turn around at some point.

Unless you've got really good evidence, unless you've got absolute clear evidence

that things are gonna be radically different a month from now, how much are

you prepared to tolerate and for how long?

So the essence of this message is to simply say, where have you allocated

time, money, emotional, spiritual, psychological energy into something

that is no longer serving you?

Let that question hang with you for a minute.

Where have you invested time, money, emotional, psychological or spiritual

energy and you're still investing in it, but it's a place that is

genuinely no longer serving you

And how long are you prepared to tolerate that?

What's the value of the next dollar?

You know, if you didn't commit this next unit of, um, energy into this thing that

you've been putting up with for so long, what could you do with that dollar?

What could you do with that energy, that spiritual, emotional, psychological

energy, if it wasn't being absorbed into this thing that is no longer serving you?

So don't wait too long, my friends.

People do this for years.

There are plenty of people who spend their entire lives doing things, careers,

you know, putting up with circumstances because they simply say, "Well, it's

always been this way. I've already put too much into it. I can't change

now." You'd be amazed what you can do, what you can change if you want to.

Okay?

So listen, I hope that's useful.

I hope you can run that audit on your life and just ask

yourself some better questions.

What could you be doing differently?

What is no longer serving you?

How do you avoid the sunk cost fallacy in your own life?

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You can find me on Instagram at JDoyleSpeaks.

You can find me on YouTube at Jonathan Doyle Speaks, and everything else about

me is on the website at jonathandoyle.co.

God bless you, my friend.

Thanks for listening in.

Here's our final quote for the day: "Stop asking what you've put in.

Start asking what it's still taking out."