Sunk Cost Fallacy
Consider having a zero sum policy this holiday season. For every stocking stuffer or present received, clear one or more items from your closets. And forget about the sunk costs.
Sunk cost fallacy is the phenomenon whereby a person is reluctant to abandon a strategy or course of action because they have invested heavily in it, even when it is clear that abandonment would be more beneficial. Facebook Marketplace and Craiglist are awash with sellers suffering from it. I refer to sellers of used goods who base their pricing on what they paid new, not on current market values.
What does this have to do with you? Let’s start with that basement, shed, or garage. Your used furniture has limited value. Yes, it cost a pretty penny, but nobody wants to pay to store or ship it. If it’s brown furniture, consignment stores don’t want it either. Time for a tag sale or a dumpster.
Which reminds me . . ..
Extended Warranties
As you purchase items this holiday season, just say “No” to extended warranties. Companies selling extended warranties are doing so because they are profitable. Very profitable. Not only do most buyers not file claims, many claims are just not covered. My advice? Click No.
And, finally, one last stocking stuffer: coal. Not really, it’s salt.
Salt Typhoon
Not to be confused with that weather forecasting favorite here in Boston, the “cyclone snow bomb.” A Salt Typhoon is far more devastating. It has the ability to take down US telecom networks.
Salt Typhoon is how US intelligence agencies describe the latest Chinese hacking of US telecoms. Earlier this month Congress and the FCC were briefed about the hacking of the eight largest US telecoms. The hackers remain inside these networks and officials do not yet know how to root them out.
Think about that the next time you link your bank account to a phone app. (Bah, humbug.)
Peter has spent the past twenty-plus years as an acting/consulting CFO for a number of small businesses in a wide range of industries. Peter’s prior experience is that of a serial entrepreneur, managing various start-up and turnaround projects. He is a co-founder of Keurig.
