On Sunk Costs and Not Throwing it Away
by Julian Hattem
This year, I learned that sometimes it’s best not to throw in the towel.
I have a tendency, probably like most people, to weigh sunk costs a bit too heavily in my calculation of investments and purchases. I throw good money after things go bad, paying to have things fixed or redone. I already own them, so why not invest to make them last? The problem is I never know when to fold ’em, when to abandon the money already wasted and move on with my life. This was the year I trusted myself to keep at it. And it worked out.
My car broke down in the autumn. It’s always been an old car, with years’ worth of dents in the bumper and rust stains on the roof. The passenger window has been broken into twice, and on both occasions, the process of shattering the window left multiple dings in the door which I’ve never had fixed. But it always drove, despite a few quirks. My car is more of a tool than a machine, really. It’s driven me across the country from the mountain west to the Great Lakes to the mid-Atlantic corridor. It’s seen oceans and two countries.
To reward its years of kindness to me, these days I hardly drive it. Maybe once a week I’ll take it out, usually for groceries, but occasionally to dinner, or the beach, or to see my grandparents two hours away. Gas is a rare expenditure, and most of the other money I throw into it (insurance and registration) is a manageable once-a-year cost. For access to a machine that gets me anywhere whenever I need it, it’s a good deal.
My city charges a nominal fee to register the car and tag it to be parked legally on the street in my neighborhood. It’s not too much money, and it feels like a fair enough tradeoff. The registration also requires the car pass an emissions test, and I had to have that done in September. Earlier this year, my “Check Engine” light turned on, and a mechanic changing my oil diagnosed something technical-sounding I didn’t understand. He said it would cost $500 to fix, but that the malfunction would show no symptoms except for the light. Something about a fuel pressure sensor, he said. Obviously, I declined. But getting my emissions test, the government-employed auto inspector said that the Check Engine light was a dealbreaker. I would have to get it fixed.
A new mechanic, whom Yelp told me was much more reliable and sure to approach any problem head-on, quoted me $600. It seemed like a whole lot of money. And it was. I bought my car a half-decade ago for about $2,000, paid in cash. To pay $600 to fix it seemed like a lot. I doubt I could get more than $1,000 or so if I sold it, and the life expectancy isn’t too great no matter what. I considered whether or not it was worth it. Instead of the car, I could get one of those carts to walk to the grocery store, I thought. It’s good exercise, and I find those carts rather charming. Perhaps this was the beginning of the carless me.
It wasn’t. I paid the $600 and got the light fixed. The mechanic said I would need to drive it a little bit so that the sensor would reset itself, so I drove around town and bought some ice cream. Then I brought the car back for another DMV emissions test. It failed again. The mechanic assured me that the problem was that I didn’t drive it enough, and would need to go on the highway a bit. I drove out to the suburbs, spending a Saturday evening watching the lights come on. Another emissions test, another failure — this time because my odometer was not readable. That, too would need to be fixed.
I was frustrated and angry at the DMV for springing a new problem on me, angry at my mechanic, whom I had grown to distrust, angry at my entire municipal government. Most of all, I was angry at myself, really, for spending $600 to fix something that couldn’t seem to be fixed.
Fixing the odometer, the Internet said, required taking the entire front panel of the car out just to change a tiny lightbulb to illuminate the digital display. My mechanic quoted me $250, mainly for the time. It seemed like it might be possible to do it on my own, too, though that required skills and tools I don’t have. Or, maybe, I should just junk the car. I worried that because I had already invested a few years and thousands of dollars in owning it, that the few hundred dollars more — a small sum, really, in the larger picture — would seem worth it, even if it wasn’t. Then, that I would have to invest more not have that last investment go to waste. It’s hard to know when to call it quits, when to admit that it’s not worth it anymore to keep pouring money into a lost cause. The natural inclination is to keep spending to salvage things, but I’m aware of that inclination, so I often try and correct for it. Then I try and correct for overcorrecting.
In the meantime, as I should have foreseen, my registration expired. I got a $100 ticket two days after the expiration date on my tags. Then another one, for another $100, two days later. It sat on the street while I figured out what to do, and each day it risked another $100 ticket. I stashed it in a parking space at a now-empty house I used to live in, and scoped out a church parking lot for future safekeeping. The more I thought about it the more conflicted I felt. It seems rash to throw a car away over $250. Especially since I had just racked up $200 more.
I committed to fixing it. It’s worth it, I told myself. I chose to believe that this new cost would cement my car’s functionality for, at a minimum, another year and a half. And $250 was worth a car for a year and a half. But maybe it wouldn’t do that. Maybe this was the beginning of the end.
I found a mechanic and planned to drop my car off over the weekend. On a lark, however, I went back the DMV early one morning before that. I realized that shining a flashlight at the odometer would make it legible, and maybe if I smiled really nicely and called people sir and ma’am, they would let me off the hook. When I met the inspector, I felt like I was lying to a cop. He took my car and had me sit in a waiting room next door for it to come around.
Inexplicably, the car passed. It took four visits and $800, plus an additional fee from the DMV for all the tests, but it made it. That was in September. So far, the car’s been running strongly, though I might need new wiper blades. In the end, the costs were worth it. But I’m not sure how much more I would’ve paid. Any more and I may have had to let the losses go to waste. Or at least that’s what I tell myself.
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