Sunk Cost Fallacy - when is it time to give up?

[The_Jeff]

To me, my tipping point for when it gets to the point where the breakdown rate starts to accelerate beyond just the normal wear and tear, and random breakdowns. There's a point when stuff just starts to get worn out and stuff starts breaking. It's kind of hard to identify in a formal, rigorous way, but if you've had a few beaters, you start to get a feel for it.

I very clearly reached that point once.

 

[fdcg27]

A close friend has a saying: people don’t get rid of GREAT used cars.

This is brilliant and often true, and although I have bought some excellent used cars that may not be typical.
This is also the reason that a used car from a dealer may be a safer bet than one from a private party.
Most of the good used cars I've had have come from dealers and they were not overly expensive.
An established new car dealer will send the junk to auction and keep the better trades on their used car lot.

 

[SC Maintenance]

A close friend has a saying: people don’t get rid of GREAT used cars.

100%. Most people I know pass a well cared for used car down to a family member or friend, needy person they know - or possibly sell it word of mouth amongst a circle of friends.

 

[Allaned]

I thought this post was going to be about marriage.....


Paco

When the other person in your couple needs new parts or the computer in the skull starts throwing bad codes you may need to trade. Just a warning though: lawyers cost more than mechanics

 

[Ronsant]

My 2006 Magnum R/T would have to fail every week for me to consider dumping it. I love driving it, and even with maintenance and repairs it’s cheaper than a $300-$400 monthly payment.

 

[HemiBenny]

My 2006 Magnum R/T would have to fail every week for me to consider dumping it. I love driving it, and even with maintenance and repairs it’s cheaper than a $300-$400 monthly payment.

I should have bought one of those. I came close, but never pulled the trigger.

What's not to love about a 5.7 Hemi-powered wagon?

 

[Ronsant]

I should have bought one of those. I came close, but never pulled the trigger.

What's not to love about a 5.7 Hemi-powered wagon?

I love it. Put a cat back system, aftermarket sway bars, and a CAI. Sounds great, hauls butt, and is super useful.
Gas mileage is not great if you’re not on the highway. Highway cruising, I can see 25 mpg. Around town 14 .
Comfortable and you don’t see many around these days.

 

[HemiBenny]

I love it. Put a cat back system, aftermarket sway bars, and a CAI. Sounds great, hauls butt, and is super useful.
Gas mileage is not great if you’re not on the highway. Highway cruising, I can see 25 mpg. Around town 14 .
Comfortable and you don’t see many around these days.

There’s a guy who owns a custom light fixture business in my small town, he has three vehicles that he drives. He has a Challenger Hellcat, a Jaguar F-Pace, and a Magnum. His Magnum is a 2008, the first and only year with the facelift IIRC. They’re all nice, but I prefer the Magnum. He told me that he will never sell the Magnum.

 

[Allaned]

My 2006 Magnum R/T would have to fail every week for me to consider dumping it. I love driving it, and even with maintenance and repairs it’s cheaper than a $300-$400 monthly payment.

If my 2006 300 C hadn’t been destroyed by a flood I would still be driving it. HEMI

 

[KrisZ]

For people that are broke or young adults just starting their careers it’s quite easy. If a couple hundred bucks here and there is a big deal, then it’s clear you’re not in a position to buy anything else, but to keep the current vehicle and save on other spendings.

 

[RBT]

The sunk cost fallacy is the tendency to follow through with something that we’ve already invested heavily in (be it time, money, effort, or emotional energy), even when giving up is clearly a better idea.

Recent Warren Buffet post got me thinking about something. My daughter‘s high mileage Hyundai has needed a few repairs over the years. Nothing major, but as a broke college student to her even a couple hundred dollars here and there seems massive. She asked me if it was time to get rid of her vehicle after some repairs a while back and I said no not yet. She asked what my criteria was and I said a few things 1) it is so much money that the price and effort far exceed the unusable life left of the vehicle - engine, transmission, suspension, etc. 2) it’s breaking so often that it causes a hindrance to your life and ability to work and/or go to school. 3) you have the money and you’re just ready for something new.

Sometimes it’s hard to know when to pull the plug, but I think it’s important not to become emotionally attached to objects. I told her I would let her know when I thought it was time. But we aren’t there yet. What is your criteria for pulling the plug on an old beater?

When I start to think about its reliability.

John Paul Getty wrote something interesting: buy things that appreciate and lease things that depreciate. I have never been a fan of constantly leasing automobiles because I don’t like being on the proverbial wheel but as I get older I think it makes no difference financially so long as the financing is not being used to drive cars that you could not buy. The key is to have a reliable income.

Personally, when it comes to the realm of money (not family which is obvious greater importance) I would rather invest all that time in my career skills that will make me better at what I do as compared to playing around with unreliable cars. Take care of your business or profession and the question of what to do when the car starts to become problematic is very simple.

That is why I tend to not flip cars but I also don’t keep them forever. Nothing scientific to that just my perspective and experience.

 

[dpalmer1987]

Two things:

- I would propose that the value of a vehicle (for purposes of this particular discussion) is not what somebody else would be willing to pay for it, but what it would cost you to replace it (for what you use it for).

- I have heard of something called the "10% rule" - if say, a proposed repair would cost $1000, divide 1000 by 10% which would give you 10,000. Then ascertain whether or not the vehicle could make at least another 10,000 (miles) with nothing more than routine maintenance. If so, then the $1000 repair would be worth it - if not, then the repair would not be worth it.