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This past weekend I was in Boise, Idaho attending a conference put on by my friend Nathan Barry for his company ConvertKit. There were so many amazing speakers there and a final keynote from marketing oracle Seth Godin. After reading some of his books and hearing him on the Tim Ferriss Podcast, I found many of his thoughts and ideas to be quite profound. But it wasn’t his keynote speech that provided one of the best notes of the weekend.
During his Q & A session earlier in the afternoon, a woman asked a question regarding a project she had worked on for quite some time. She was emotionally invested in it, but it wasn’t going as she wanted it to. She had long ago grown tired of it and didn’t want to work on the project anymore. But, she didn’t feel like she could give up on the project because she’d invested so much time and energy up to that point.
The Fallacy of Sunk Costs
In response, Seth spoke about the fallacy of sunk costs–the idea that our decisions are tainted by the emotional investments we accumulate, and the more we invest in something the harder it becomes to abandon. Even though we want to do something else, our gut might be telling us to go in a different direction, to simply let go, we struggle to do it.
He then explained it this way:
Everything you own, all the clothing in your closet, your academic achievements and beyond is simply a gift. It is a gift that your past self is giving to your present self, and it’s up to you to decide whether you want that gift today.
It is as simple as that—you owe your past self nothing, other than the consideration of whether these gifts are helpful in the here and now.
You may have bought that shirt when it fit better and when you loved how it looked on you. Now, it’s been through just a few too many spin cycles and sits unused. It might have been expensive, it might have been super meaningful to purchase at the time, but it is still simply a gift from your past self.
What if a friend gave you that shirt today instead? If you had no prior attachment to it, would you hold onto it anyway?
Probably not, right?
My Portfolio of Credit Cards
This narrative is perfectly reflected in the story how until recently, I had so many credit cards that I didn’t even use.
For the last few years, I’ve had about 12 (or more) credit cards. That’s not 1 or 2, it’s 12—and this didn’t happen by accident, either. Two years ago, I was introduced to travel hacking—using credit card bonuses and deals to travel really cheaply—and really got into it.
At the time, both Amy and I were full-time freelancers and had a lot of flexibility with our schedules, but not a ton of extra money.
By signing up for credit cards with huge bonuses, I was able to get the Southwest Companion Pass which allowed Amy to fly free with me on every Southwest flight for a year and a half, got us free flights on Delta and American Airlines, eventually totaling hundreds of thousands of frequent flier miles.
It was this that allowed me to go to Honduras in 2015 to help get The Hope Effect off the ground, attend World Domination Summit last year, and so much more.
It really was a beneficial thing for us—until recently. The bonuses were long gone and they simply weren’t serving any purpose other than complicating my financial life. Each month I’d have to check each one off of my to-do list, double-check that there were no balances on them, remember due dates, and so on. Some of them even had annual fees that I was paying out-of-pocket!
It’s strange to think about having an emotional attachment to a piece of plastic provided by a bank, but I certainly felt it. All these credit cards were the things that enabled so many cool experiences, and I was feeling very resistant to cancelling them.
In addition to that, I had heard that my credit score might drop if I cancelled them. Apparently the credit companies like to see a portfolio of credit lines, but I decided that I am not a credit card portfolio manager and it was time to let them go.
I’m happy to report that cancelling all the inactive cards had little effect on my credit and my financial life has simplified substantially. Looking back, I wish I had done it sooner but it’s only easy to see why now that it’s done.
The Gifts We Give Our Future Selves
Seth’s explanation of the things we own just being gifts from our previous selves really did change my perspective about the “stuff” in my life. Knowing that the effort our past selves used to acquire and own the things we have is refreshing.
The best part is that the past self that did that work is now gone—that person no longer exists. There is only your present self, which brings up the next question.
What gift is your present self preparing to give your future self?
If everything we acquire in the past is only a gift from our past selves to our present selves, then it should be thought that the things we acquire and the work we do today will only be a gift to our future selves. Perhaps with this thinking, we find more clarity on what gifts our future selves will actually want to receive.
While there is nothing wrong with doing something for yourself in the present moment, allow the perspective of your future self receiving whatever it is you’re about to do—or purchase—and ask if it is something future you might actually want. You may be surprised at what answer you find.