How do you get over the feeling of ‘sunk costs’ and loss?

Reader Lani wrote in asking….

How do you get past those feelings of:

  1. I don’t want to lose that money
  2. What if I need it again
  3. I could save so much by keeping the clothes and not repurchasing them!

My response?

GOOD ONE! 🙂 In fact, great questions!

These are things I struggle with every single time I get rid of stuff and here are my thoughts.

Via Post Secret.

“I don’t want to lose the money”

I can relate to this because I go through it every time I want to get rid of something that hasn’t worn out, but I just don’t want it any longer.

When I get those feelings of not wanting to “lose money”, I remind myself that the money is already lost (I spent it on said item!!!) and I keep in mind something called “sunk costs”.

Sunk costs are what you’ve spent into an item, which makes it feel like you are losing out if you don’t recoup what you spent on the item.

In reality, what you spent on the item has no bearing on how much it is worth on the market today.

Proper definition of Sunk Cost:

Any expenditure that has already taken place and can not be undone. Decisions should not be made based on sunk costs.

 

Picture this:

You bought a camera for $500.

(OOOH! PUN! PUN! Get it? Camera? Picture this? Oh never mind.)

A year later, you upgrade to a better camera that you should have bought in the first place for $1000.

You decide to sell the $500 camera, but you want to get as much money as possible out of the deal (naturally!).

You price it at $400, thinking it’s a fair price considering you paid a hundred bucks MORE for the item a year ago, and it’s worth $400 today.

Someone comes by, looks at it and offers you $250. You manage to negotiate her up to $300, but ultimately you reject the offer, thinking that she doesn’t know the value of the camera.

Weeks go by, and more offers come in at around the $200 – $250 range. Insulted, you decide to forget about selling it, and it sits on your shelf collecting dust.

Result?

  • You didn’t get rid of the camera in the end
  • You have a  second camera you don’t really use any more
  • The longer you wait (especially for technology) the less it’ll be worth in the future
  • You lost out on $300

See what happened there? Sunk cost came into effect.

You can’t take into account what you spent on an item to have any bearing on its price today.

Suggestions:

  • Do your research and get a ballpark of your items’ current market value
  • Understand that people who buy secondhand items are looking for a deal
  • Things usually go for 50% of the original price, unless it’s a rare or special item
  • Think of the item as clutter
  • Don’t think of the item as “cash-in-hand”, because it isn’t cash, it’s clutter

I plan on expanding this garbage bag when I get back to Toronto!

“What if I need it again?”

If you really needed it, you wouldn’t be thinking of selling it, now would you? 🙂

My parents are the King and Queen of this feeling. This is why their home is filled with junk, because my parents think they might need it again one day.

Tips to help you parse things out:

  • Do you really need it again?
  • Have you used it in the last 6 months? Last year? Last 5 years?
  • Will you need to repurchase it again some time in the future?
  • Do you have other substitutes or alternatives that are available?
  • Can you give it to someone in the family who needs it?*
  • Can you find another use for it?**
  • Do you want to get rid of the item just because you don’t want it any more?
  • Do you feel guilty for getting rid of it?***

*We give our old laptops to our parents because they don’t need high horsepower and rarely use the machines, if at all.

**Like turning old t-shirts into rags to use around the home.

***Read: Dealing with sentimentality: Your things are just things, not the people you love or your memories and a little bit on how I handle sentimentality when I live in hotel rooms.

The best strategy to help you let go

This is the only strategy I find that works for me.

Keep the item in a sealed and hidden box for 6 months to a year. Put the date on the box.

If you haven’t opened the box in that time, donate it to your local charity, lock stock and barrel.

Don’t even open it, don’t rifle through it, just get rid of it.

Heaven. 🙂

“I could save so much by keeping the clothes and not repurchasing them!”

If you don’t want the items, they are taking up space, and space is money.

If you pay $1000 a month for 1000 square feet, and your unused, unworn things take up 30 square feet, you are wasting $30 a month!

$30/month x 12 months = $360/year

$360/year x 30 years = $10,800

I’m not even taking into account compounding interest over the next 30 years!

(Nor inflation for that matter).

The bottom line is that you should realize 3 things:

  1. You will never use or wear it again
  2. You will (probably) buy what you actually want to use or wear again
  3. It’s taking up space and space is money

So why not take the money?

I’d rather have the money

Even if I spent $400 on an item and I only got $150 cash for it, I’m happy.

That is $150 CASH in my hands I can save and/or use towards something else that I actually need and want.

It can be painful to let go of something, especially thinking of how much you spent on the item, but if it’s on your mind and cluttering your life, you just need to let it go!

So readers, what are your coping strategies for when you have to get rid of stuff?

About the Author

I'm a 20-something year old girl who lived out of a single suitcase in 2007, and now I'm living with less, but only with the best. You don't have to get rid of everything to become a minimalist! Minimalism can help simplify and organize your life, career, & physical surroundings. You can read more about me as a minimalist. Or come and visit my other blog Fabulously Broke in the City where I got out of $60,000 of debt in 18 months, earning $65,000 gross/year.