As I write this, I’m on a flight back to Portland. I’ve spent the weekend with former GRS staff writer Adam Baker and his wife Courtney in Indianapolis, Indiana. Ostensibly, we were there to take part in GenCon, a huge gaming convention. We did play plenty of games, but we also had a lot of fun just hanging around and chatting. It was great to take a four-day break after months of being “on” all the time.
In my dream world, though, I wouldn’t be on a flight to Portland right now; I’d be on a flight to London instead.
In late June, I laid out plans for a five-week trip to England (and beyond). I was going to hike Hadrian’s Wall, take in an Everton football match (or two), visit Bath and Wells, and — best of all — spend time with GRS readers all across Great Britain. (And possibly in France and/or The Netherlands, as well.) On July 4th, I bought a one-way ticket to London, and was looking forward to having a series of small adventures.
That’s my dream world.
In the Real World, things didn’t go as planned:
- Mom got sick. My family is still wrestling with her situation. It looks like she’ll move from the “memory care unit” to a regular apartment in the assisted-living facility, but she’s not happy about being there. Plus, her finances are a mess. Of the family members, I’m the most logical person (and the only one with time) to untangle things.
- Meanwhile, my own house has problems. The roof is leaking. In most places, this isn’t an issue during the summer, but I live in Oregon. We’ve had some heavy rainstorms, and these have revealed a leak coming into the guest room upstairs. So, we’re trying to hire a roofer to begin work soon. Trying is the key word here. All of the roofers are flooded with work because it took so long for the rain to let up this year.
- I’ve received a jury summons for early September, right when I’d hoped to be in France and/or The Netherlands.
- Kris, who had thought she was okay with me being gone, isn’t quite ready for me travel on my own for an extended period. This may sound unimportant, but it isn’t. She needs to be comfortable with this too before I take off on my grand adventures. By delaying a couple of months, it gives her time to get adjusted to the idea.
There are other smaller problems, too. Taken together, these factors have forced me to admit that now is not a good time to make a solo trip to England. My adventures will have to wait.
What does this all have to do with money? Well, I’m about to present an object lesson in sunk costs.
Kris and I talked long and hard about the decision. She was actually more in favor of me going than I was. “You’ve already bought the ticket,” she told me. “You shouldn’t let that go to waste.”
“I don’t want to waste it,” I said. “But it’s a sunk cost. It’s not a factor in the decision. That money has already been spent whether I go or not.”
I’ve tried to write about sunk costs twice before but without much success. (Here’s the first time and the second.) And whenever I mention sunk costs in passing, people misinterpret my meaning. For some reason, the popular (and incorrect) definition of “sunk cost” equates to something like “dumb spending” or “spending you shouldn’t have done”. But that’s not what the term means. Sunk costs are simply costs that have already been incurred and cannot be recovered.
Sunk costs are neither good nor bad. They just are. There’s no value associated with them at all. (In fact, it’s when we assign values to sunk costs that we make poor decisions.) Thus, sunk costs shouldn’t be considered when making a decision.
In my case, I tried to recover my costs. I contacted my friend Chris Guillebeau for his help. He explained how plane tickets work. “It’s all about the terms and conditions,” he told me. “If your ticket is refundable, you’re good. Even if it’s not, you can usually reschedule or get some sort of flight credit.”
So, I called around to see if I could get a refund or somehow reschedule my flight. For once, though, my frugal habits worked against me. I bought my one-way ticket to London for $900, a full $500 less than any other ticket I could find for the same itinerary. But one of the reasons my ticket was so cheap was that it was fixed — I couldn’t change anything about it. (I’ve never had to change a ticket before in my life, and I didn’t expect I’d have to change this one.)
Bottom line: I spent $900 on a plane ticket that had to be used or lost.
Last week, when it came time to decide whether I was actually going to London, I didn’t even consider the cost of the ticket. If I flew to England, I was out the $900. But if I stayed home, I was out the $900 too. This is the purest example of a sunk cost I can imagine! As a result, I was able to make my decision based solely on the pros and cons of each option.
Leaving aside the money I spent to buy the ticket, it makes more sense for me to stay home. I hate doing it — I want to travel! — but it’s the best choice for my mother, my wife, and my house.
I don’t feel bad, though. I know there’s lots of travel in my future. It took days for me to decide to skip my trip to England, and during that time, Kris and I had some long talks. During these discussions, we agreed that in exchange for staying home now, my trip to Latin America in October is a sure thing. Nothing will stop that. I’m plotting other trips too, including a possible trip to Antarctica with Chris Guillebeau where I hope to make Your Money: The Missing Manual the second-best selling book on the continent.
Plus, by waiting eight weeks, I’ll have more time to tackle some other projects. I’ll be able to get my diet and fitness back on track. (They’ve taken a hit over the past month!) I’ll have an extra eight weeks to learn Spanish. (I’ve been taking classes for a couple of months now. Me gusta es mucho.) And, perhaps best of all, I’ll have extra time to purge the Stuff that’s been causing me so much consternation around here.
And you know what? Now, I’ll have more time to write here at Get Rich Slowly! Even though it feels like I’m wasting $900 by skipping my trip to London, I know it’s the smart decision.