What are Sunk Costs?
In brief a sunk cost is money you’ve already spent that cannot be returned to you. Gambling is a classic example of sunk costs when someone adopts the mindset that they need to gamble more to cover their costs. Losing $100 and then chasing the debt at the Craps table trying to cover your initial loss is a sure way to leave the Casino with even lighter pockets. At the financial blog The Simple Dollar they highlight common places that sunk costs show up in day-to-day living and how you can identify and acknowledge sunk costs to cut down on stress and further financial loss. They open with the example of baseball game tickets: In order to get cheaper tickets, we bought the tickets in advance – they’re already paid for and printed out. We’re all ready to go to the game. But let’s say it gets to be 6 PM this evening and our son is sick, or my dad gets tired and doesn’t feel like going. It might make sense for me to want to push everyone to go to the ball game. After all, I already have the
