My wife and I are having a disagreement as to what it means. She says that it means the cost of something you purchased some time ago, and had you not purchased it the money would be gone anyway.
Basically, 3 years ago we decided to purchase something to hold onto and sell later on when the value goes up. She says that the purchase price can be considered as profit since it was so long ago. I disagreed. Anyway, she calls it “sunk cost”.
In: 59
Your wife is right (or at least not entirely wrong). She’s just using a bit of a weird way to put it. And if I’m understanding her correctly, she’s being smarter about money, as well.
You bought a “thing.” We don’t know what this thing is. You bought it to sell “when the value goes up.”
In other words, you gambled.
When you’re gambling healthy, you have a stack of money. It’s throwaway money. No matter what, that’s what you’re allowed to gamble with. That money is already gone, because you’re spending it on the act of gambling.
Now, say you win $1. You didn’t lose all but $1, you spent the money you intended to spend and won $1.
You intended to gamble on this thing. If you win anything from selling it, you’ve won whatever you get. Whatever you get is your profit.
The amount you spent is the sunk cost. That’s your gamble. Your wife is right because whatever you get from the gamble is your winnings. The only time you get “losses” in gambling is when you spend money you shouldn’t be spending.
Now for the real sunk cost fallacy.
You’re sinking your emotional bandwidth into this silly argument. You’re taking your gambling too seriously. For you, this is about profit and original cost and where the money came from and what you could’ve done with it. You’re not getting any winnings.
Your wife, on the other hand, is getting her winnings and her happiness and she doesn’t need to care about all that.
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