Not Your Average Financial Podcast™

Episode 108: [Toolbox] How the Sunk Cost Fallacy Messes with You

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In this episode, we ask:

  • What is the sunk cost fallacy?
  • What is loss aversion?
  • What is the status quo?
  • Are you knee-deep in something?
  • What did Christopher Olivola say?
  • Do you ever sit through a movie you don’t like?
  • Do you ever finish a low quality book?
  • What did the Journal of Behavioral decision making say?
  • Have you ever risked your life to attend an event?
  • Have you done this in relationships?
  • Can you get your lost money back, by throwing more money at it?
  • Do you throw good money after bad?
  • Do you double down on loser stock?
  • How do you move on?
  • How does this work in investment portfolios?
  • Is it better to cut your losses or stick it out?
  • How long do you have to wait for recovery after a market drop?
  • Do 50% market drops ever happen?
  • How long are you willing to wait?
  • What about 10% drops in the market?
  • How long before you break even?
  • How do averages mess with your portfolio?
  • Have you had someone say “don’t look at your 401(k)”?
  • Where are you falling for the sunk cost fallacy?
  • Will taxes go up in the future?
  • Are you contributing to tax-postponed retirement accounts?
  • What would be a better environment for retirement savings?
  • What about surrender charges?
  • What about indexed universal life products?
  • Are you paying more costs?
  • Do you want to continue to pay the fees?
  • Are you working with a professional?
  • Are you working with a specialist?
  • Do you have a gut feeling that something is off with your current structure?
  • Can you see the expenses on a whole life policy before you sign up?
  • Have you heard Episode 36?
  • Are you sticking with the plan even though it no longer serves you?
  • What is the real problem?
  • What is the cost of inaction?
  • Have you heard Episode 99?
  • Can you see the logical fallacy?
  • Have you written a pro and con list?
  • Should you take action?
  • Have you gone through the fear setting exercise in Episode 99?
  • Do you set goals in advance?
  • What are SMARTER goals?
  • What costs are you willing and not willing to endure?
  • As a thought exercise, have you dropped in to your current life, as an outsider?
  • Can you avoid more loss?
  • Are your decisions rational?
  • Are your decisions emotional?
  • Where is the sunk cost fallacy showing up for you?

    • ...more
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