The Biggest Lie Holding You Back From The Path You Want - The Break Issue 37
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Lies, Damn Lies and Excuses
Of all the excuses I hear for why people don’t get out of a bad job, here is the #1:
“I’ve already put so much into this path. It would be stupid to quit.”
They say, but what about:
If that’s you, buckle up for some harsh truth.
All those excuses are LIES.
Your “thinking brain” is lying to you, by committing a logical error.
It’s a big f-ing problem, that needs to get fixed right now.
It’s called the Sunk Cost Fallacy.
Here’s what it is:
The Sunk Cost Fallacy describes our tendency to follow through on an endeavor if we have already invested time, effort, or money into it, whether or not the current costs outweigh the benefits.
Hey, we all make mistakes, but continuing on a bad path isn’t a way to success, it’s a certain path to misery.
I learned about sunk costs the hard way as a trader.
I learned that if I stubbornly stuck to my trade and ADDED to it, even as the market was moving against me, I would most likely lose big. Better to take a small loss and re-evaluate because throwing good money after bad on a trade that isn’t working is a great way to go broke.
Even after learning that painful lesson, I still didn’t “get it” outside of investing.
I still continued trading as my career path even though I was miserable, depressed and anxious.
I was one of those guys who thought I could never quit something.
I was invested in my career, and I was determined to make it a success, or die trying. Literally. That was my self talk, I thought it was totally ok if I died of a heart attack in my chair at 28 years old if it meant that I didn’t quit!
That’s not a good and fulfilling path. That’s INSANE!!
Why continue on that path, and sacrifice my future years of happiness?
It’s irrational because as human beings, we have SO many more options than we think we have.
Luckily, I said F-that to the hours of study and blood, sweat and tears I put into succeeding at trading.
Luckily, I stopped adding time and energy to that losing trade, and I BROKE that path, and started building a better future.
How to combat the sunk cost fallacy
Learn to recognize it. At a basic level, everything you’ve done in the past: every dollar, every minute, every action is “sunk”. When you find yourself saying thinks like “how can I make it worth it”, “but what about”, or “I just need to get back to even” you’re probably succumbing to the sunk cost fallacy.
Focus on the next thing. When evaluating a decision now, only your next dollar, minute, action is relevant. Base your decision on that. Just because you went got a master’s degree in teaching doesn’t mean you need to spend your next single minute as a teacher if you hate it.
Ask, what am I willing to give up to get what I want? Most clinging to sunk costs is based on fear. Understanding what you are willing to give up in order to get what you want is a very helpful question. Are you willing to let your credentials expire? What about your title?
Ask, how might I leverage my sunk costs to turn them into advantages on a new path? Just because something in your past is “sunk” doesn’t mean it’s not an asset that can be useful. What are the things you’re clinging to that could be used in a novel way on your new path? I know a financial advisor who has kept up his credentials even though he doesn’t manage client money anymore. His credentials give him credibility for his blog and his news appearances, which now net him way more than his financial planning business.
Cutting the sunk cost anchor
In long term games like trading and life, the differentiator between winners and losers isn’t those who are never wrong, its those who minimize their pain or loss when they inevitably make a mistake, and win big when they are right.
The great news is you only have to be right big once in your life.
The bad news is you likely need to be wrong small a few times to figure out what “right” is.
What could you be, if you cut the weight of your sunk costs?
Hanging on prevents us from changing our mind, recognizing our potential, adapting, and ultimately achieving success.
Letting go of that anchor is how you live in the future.
The current decision is about your incremental effort. Your next dollar. Your next minute.
Is the path you are on still worth your precious resources? Or should you direct them elsewhere?
See you next week!
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Jennie Blumenthal is the founder of Corporate Rehab where she coaches executives to re-engineer their relationship with work to grow in their current career or in a new opportunity.
Jennie’s “break moment” came in the midst of Covid with kids at home and huge responsibilities at her consulting job. Like a lot of us, she got some space to re-evaluate and realized the amazing career she built over 20 years overseeing 250 employees and consulting with some of the biggest and best Fortune 500 companies in the world still wasn’t utilizing her skills talents, and energy in the ways she wanted. So she put herself through her own Corporate Rehab. Check out her story, it’s a good one.
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