The Sunken Cost Fallacy
Stop Spending Time on Your Mistakes and Move Forward
“You’re under no obligation to be the same person you were five minutes ago.”— Alan Watts
“I’ll just ride it out”, I said, not knowing how that was possible. I knew that we were already in so much debt, I knew that I was burned out, and I knew that I was not fulfilled. It felt heavy, those words - as if no matter what I did, I was doomed to be tied to my past decisions, unable to see that I could cut that burden free and move on. We've all been there—holding onto something because we've already put so much time, energy, or money into it. Whether it's a failing project, a relationship that’s lost its spark, or a hobby you no longer enjoy, the investment you’ve made can feel like a chain keeping you anchored to the past. This is where the sunken cost fallacy comes into play, and it can be a powerful force that prevents you from moving forward. It can be even more challenging when your identity is intertwined with said decision (I’m the owner of X, I am the wife of Y, I am the captain of the Z team). Both ourselves and those around us may find more comfort in our stasis (even if unhappy) than in the uncertainty of us changing.
What Is the Sunken Cost Fallacy?
The sunken cost fallacy is a cognitive bias that leads us to make irrational decisions based on the cumulative investment we've already made rather than the future impact of continuing. It’s the voice in your head saying, “I’ve already spent so much time on this, I can’t just quit now,” even when the situation is no longer serving you. I hear it from nearly everyone from entrepreneurs to busy moms - particularly as we hit our 40s and beyond. By this age, we’ve dedicated decades to our careers, partners, the area we live in, and even who we say we are (I’m introverted, I am vegan, I love soccer, I don’t like eggplant) even if that no longer fits who we are or what inspires us.
Why We Fall Into the Trap
The Sunken Cost Fallacy is rooted in our aversion to loss and our fear of the unknown. We hate the idea of “wasting” resources, so we convince ourselves that continuing will somehow validate our past decisions. But this thinking is flawed - when we cling to things that no longer serve us, we’re actually doing more harm than good. The resources we continue to pour out of us —time, money, or emotional energy—are unlikely to yield a positive return if the endeavor is fundamentally flawed. Imagine if a car was constantly costing you money - every day it was a new part, another service, a delay again because your battery died. Despite it once being your dream car, it is definitely not serving you now. In fact, you’re losing - not only your time, money and resources, but your aggregated frustration, disappointment, and anger are going to impact every other area of your life. Sure, you’ve still got that car you wanted so much - but you’re snapping at everyone all day long, stress-eating, you picked smoking back up and you’re consistently late everywhere which is affecting your relationships. Is it still better to hang on to it? When we replace ‘car’ with career, old friendships, patterns, habits, and more - you can see the impact in every area of your life.
How to Recognize the Sunken Cost Fallacy in Yourself
You Feel Obligated to "Not Waste" What You’ve Invested
Do you find yourself thinking, "I’ve already spent so much time/money on this, I can’t quit now"? This is a key indicator of the sunken cost fallacy.
Recognize when your decision-making is based more on past investments than on the current or future value of the endeavor.
You’re Ignoring Evidence That It’s Not Working
Are you rationalizing setbacks or ignoring red flags because you’re already committed? If you’re hesitant to face the reality that things aren’t going well, the fallacy may be at play.
You’re Stuck in a "Just One More Try" Mentality
When you keep thinking that just one more effort, payment, or adjustment will turn things around, ask yourself if this cycle has repeated before. If so, it’s a sign you’re stuck.
You Feel Fear or Guilt About Quitting
Fear of regret or guilt about wasted effort can keep you holding on longer than you should. This emotional attachment clouds your judgment.
You’re Comparing the Past to the Future Instead of the Present to the Future
A sound decision should consider the present situation and future benefits. If you’re overly focused on what you’ve already spent or endured, the fallacy is driving your choices.
If any of these resonate with you, it’s time to reassess.
The Unknown vs. The Known
Imagine you are in neck-deep water in the middle of a deep lake - I know, it might not feel like a stretch depending on where you are in life right now. You’re barely keeping your head above water - whether that’s with finances, constantly fighting with your spouse, maybe an addiction you can’t quite shake, a job that drains you daily, or you literally have the nightmare of a car I talked about in the first paragraph. The more you struggle with this issue that doesn’t serve you, the more exhausted you become. The higher the probability that you will sink below the surface until you can no longer thrive. It hasn’t served you in a long time, and simply because it once did doesn’t mean you owe it the rest of your life or energy. You cannot swim to shore with a lead weight tied around your waist, no matter how hard you swim. In order to move forward, you must let go of what is dragging you down.
We struggle at this precise moment - we know the discomfort of what we have, we know what it costs us, who accepts us as-is and we know how it feels. We don’t know what freedom will feel like, we don’t know who will be there as we change, we don’t know what else a change will impact. The fear of the unknown often outweighs the current pain. Until those scales tip and we begin to suspect that our current situation is worse than the risk of change, we will stay precisely where we are - often blaming everyone and everything around us for the predicament. Once we acknowledge that we have the ability to choose a better, even if uncertain future, we can move forward.
How to Break Free
Shift Your Focus to Future Gains
Ask yourself: "If I had no history with this, would I start now?" Reframing your decision around future opportunities and potential outcomes can help you detach from past losses. Would I chose this job today? Would I date this partner?
Practice Self-Compassion
Let go of guilt. Remind yourself that quitting isn’t failure—it’s learning. Every decision is a chance to refine your judgment and grow. Wasted time or money doesn’t define your worth.
Seek Objective Feedback
Talk to someone you trust who isn’t emotionally invested in the situation and who’s choices you admire. A fresh perspective can help you see the logical choice more clearly.
Conduct a Cost-Benefit Analysis
Write down the pros and cons of continuing versus quitting. Be honest about the current and future value of the endeavor. If the cons of continuing outweigh the pros, it’s time to pivot.
Set Clear Exit Criteria
Establish specific benchmarks that would signal it’s time to walk away. For example, “If I’m still not seeing progress after three more months, I’ll move on.” This approach removes emotional guesswork.
Remember Opportunity Cost
Opportunity cost is the value of what you’re giving up by staying invested in a losing situation. Ask yourself: "What could I be doing with my time, money, or energy instead?"
Take Small Steps Toward Letting Go
If walking away feels overwhelming, break it into smaller steps. Gradually reduce your involvement or investment, allowing yourself time to adjust.
The Power of Letting Go
You have one precious life, and the length of time you have left is uncertain. The true measure of your worth isn’t in the things you cling to out of habit, fear, or past investment, but in the choices you make as you move forward. Each decision shapes the path ahead, so if something no longer serves your growth or happiness, give yourself the grace to release it.
Letting go might mean:
Asking your partner to go to counseling, even if that means admitting your share of the wrongs.
Admitting you are unable to control your drinking/eating/scrolling, and seeking help.
Realizing you are upside down in your mortgage and getting a roommate to offset costs.
Talking to your boss about your issues at work - consider a different department or get a recruiter to assist in a new place.
Realizing you don’t want to be in the career you are in and be willing to learn a new skill.
Packing up your house and moving to a Greek island full of cats, sunshine and dancing ;)
At any given moment you have a dozen, a hundred, maybe thousands of possible outcomes before you. When we are so exhausted by what we are hanging on to, we lack the energy to properly dream of more. By letting go, you free yourself to embrace new possibilities. Your future self will look back and thank you for the courage to choose wisely and live authentically.
My deepest wish is that each of you understand that you are worthy of a wildly fulfilling and joyous life. It took me years to convince myself of the same, but from this side of things? You 100% are.
Looking for a sounding board? Need clarity? Feel free to message me anytime or leave a comment below!
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