Morning Musings #060: Sunk costs (and the sunk cost fallacy) | Get Rich Slowly Video

It's human nature to consider sunk costs when making decisions, but this is generally a mistake. A sunk cost is any expense (of time, money, emotion, whatever) that you have already made and cannot possibly recover. The sunk cost fallacy is when we mistakenly take our past costs into account when deciding what to do in the future. All that matters when making financial decisions (and many other decisions) is what the best option is going forward. What we spent in the past is irrelevant.