People get stuck

People assign value to things illogically. There are examples everywhere. In my job, we often have to tell people that they would be better off scrapping the expensive legacy hardware/software solution they use for something completely different. They don’t want to. We show them on paper how it will improve their business while saving money. They agree with the paper. Still won’t budge. And these are smart business folks. Why?

"We’re already very invested in "Solution X."

Huh? This was the argument train companies made when air travel was poised to dominate. This was the argument people made holding Yahoo stock at $175 as it dove past $44 on it’s way to $3.

Here’s the thing: The problem is that "investment" is a word that connotes longevity. Investing is like a value. No one wants to cut and run. But in most of these things we are not really investing. We’re just buying stuff to get us through. Like a TV. People upgrade their TVs all of the time when something better comes along because you just buy a TV – you don’t invest in it.

Here’s my example of this phenomenon. I used to drive a BMW 750iL. 2 years ago I bought a Jetta instead. The dealership made a low, but fair, offer on my BMW. I was shocked. Shocked! $4500 for this car? This once proud flagship of Germany? With such low miles? "I’ll sell it myself!"

Well, over the two years that the car has been sitting in my garage, I have paid $2400 in insurance and $1600 in repairs. All because my pride couldn’t let me see that the value of the car was the value of the car. It wasn’t an investment. Just something I bought.

Here’s what I learned: Try to judge these things based on the reality. Don’t get so wrapped up in your computers, your software, your car, your stock, or your idea that it blinds you to reality. Look at it from the outside and you will make wiser choices. After all, sometimes we’re just buying stuff.

I sold the car yesterday for $5000.

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