In early 2020, I decided to buy a piece of land in Truckee, California, and build a home. I had written about this in a prior weekly perspective. When I wrote that piece, I mentioned how the home, once completed, was a modernist masterpiece in everyone else’s eyes, but to me, it was one big set of mistakes and bad decisions. All I could see were problems, while every visitor saw nothing but beauty. I concluded that last piece by saying I was going to work on doing the mental gymnastics necessary to start seeing the home the way everyone else did rather than focusing on the flaws.
I have now been in the home for 18 months, so how is it going? Well, I “pocket listed” the home with an agent a few weeks ago who will officially list it for sale in the spring. Readers of this may feel bad for me when they hear this news. Whenever I tell someone about this decision, the response I get, literally 100% of the time, is, “But you put so much time, energy, and money into that home.” This is true, but all of that can be distilled down to one of the most important concepts in accounting and business: the sunk cost. The concept of a sunk cost is that one should not make future decisions based on what they have invested in the past, but rather only consider the present situation and what they want their future to be. Sunk cost is about emotion and ego and should not serve as a variable in decision-making.
I am very proud that I am deciding to push aside my ego and emotion when it comes to the decision to sell the home. I am certain, after trying as hard as I could, that I will never be truly happy in the home; therefore, what I put into it is not relevant. I am also proud that I am typing this in my 330 sq. ft. apartment in NYC, happy as a clam. As it turns out, I don’t really need much to be happy: I just need to be warm, dry, fed, and loved, with less complexity rather than more.
