5 tips to help you stop throwing good money after bad,

Throwing good money after bad or the ‘Sunk Cost Fallacy’ is another form of overspending that we can slip into without realising.  It could be the house renovation that becomes the never ending money pit and deep down we know we will never recover these costs when the house is sold.

Sunk Costs are everywhere and they don’t occur only in your finances or business.  Have you sat through a really bad movie thinking “oh well, I’ve watched an hour so I may as well watch the rest”.  Gottcha!!  You have just succumbed to a Sunk Cost.

“In for a penny, in for a pound” my Dad would say, as we headed to the local eat-all-you-want buffet restaurant for a family dinner.  “I’ve paid my $25.00 (ok, this was a little while ago), so I am going to get my money’s worth and eat as much as I can”.  Over the course of the next couple of hours he was true to his word!

So what is the Sunk Cost Fallacy?  Well, in a nutshell: we keep making decisions (monetary or otherwise) based on how much we have already spent on a project.  It’s hard to let go of something that is going backwards, or not complete an expensive project even though the cost of continuing just isn’t logical.

Christmas Shopping – Try a different approach

Only two days until Xmas.  For Kiwi’s it’s the start of our summer holidays.  There is always the mad rush to finish work for the year, as well as  getting the Christmas shopping done.

Then of course there is the food for the day to organise, whose house are we going to and what is the weather going to be like.

After all rushing arround many of us head off to our favourite holiday spot, battle the other holiday makers in the traffic for a bit of rest and recreation in the sun.

I love shopping!!  So for me Christmas shopping isn’t a chore.  It’s an event that requires planning and usually starts in October and runs right up until Xmas Eve.  I always seem to find that little extra something for someone in the family and OK, sometimes for myself as well.  Whilst this is all great fun, it does tend to blow the Xmas shopping budget, so this year I resolved to do things differently.