TFF Consulting

TFF Consulting

If You Wouldn’t Buy it, You Should Probably Sell it

Don’t let the boat anchor of your past mistakes drag on you forever into your future.

Clinging to past behaviors is one of the built-in weaknesses (also known as Cognitive Biases) that we humans are born with. In this case, we’re talking about Loss Aversion and maybe a bit of the Sunk Cost Effect: we tend to value things we already have, and things we have poured a lot of money into, even if they are in fact pieces of crap when measured on an objective quality-of-life scale.

“I’d hate to take the depreciation hit on this 2012 Dodge Ram 1500 BigHorn after making three years of payments on it!”

These prepackaged flaws are so powerful that we need to pull ourselves deliberately in the other direction in order to end up at a reasonable middle ground. Even when you think you’re living life in a reasonable fashion, this bias will still sneak up and bite you.

And it still bites me too – let’s look at another example from my own life right now. Do you remember that rental house I was so happy to have sold in the last article?

via If You Wouldn’t Buy it, You Should Probably Sell it.

Previous

Jump! | StrongFirst

Next

7 Ways to Live a Simpler Life in a Modern World

1 Comment

  1. Good post! As hard as it is to do sometimes, you have to take emotion out of most financial decisions. It’s the only way to keep history from repeating itself.

Leave a Reply

Powered by WordPress & Theme by Anders Norén