One of mistakes I made when I was younger is not being able to make decisions about quitting sooner.
In my career, I felt I stayed too long in most jobs. This is costs me tens of thousands of dollars in my career.
In my personal life, I have held on to relationships and friendships far too longer than I should. This cost me my emotional energy spent and time.
In investing, I have held on to positions in shitty companies longer than I should. This has cost me the opportunity cost of deploying capital elsewhere.
I doubt I am the only person who struggles with quitting. I have had friends who stay in relationships where they are not growing or happy just because they are “scared to make the other person sad” or “afraid they can’t find someone better”.
When deciding whether to persist or quit, many of us make life decisions largely based on emotions. Yet, we are all subjected to various cognitive bias including those from past traumas we’ve had.
Furthermore, some powerful emotions like fear, ego and guilt should not control our lives.
I believe it is important to use a good combination of our head and heart in all life decisions. After all, at this stage of our lives, one poor decision can cause a disproportionate negative impact on our future.
If you are struggling with decision making and quitting, I hope that this post is helpful to you.
1. Assess the quality of decisions based on the process, not outcome
All of us have little control over outcomes of our decisions in life. The world we live in has a lot of uncertainty, changes and factors beyond our control.
We can make the best possible decisions and take all the correct steps. However, we can still fail because there are just too many factors in this world outside of our control. There is a tremendous influence of luck.
For example, we can end up heartbroken despite giving our best and opening ourselves up to someone we love.
When faced with failure, some might just close themselves off. They blame the process: “Oh, I should not have given so much”
However, in this case, the process is correct. To have healthy relationships, we need to put in our best efforts and date with an open heart.
The blame lies in the external variables. In this case, the person was not the right one for you. This is because the right person for you will be able to love you in return and give you their all too.
A decision is not a bad one if the process is correct. Focus on what you can control which is your decision making process.
2. Set up rules for myself on when to quit
When I make decisions and set goals in life now, I have an “unless”.
Having an “unless” will give you the flexibility to ensure you can be more responsive to the changing landscape, and reduce escalation of commitment to losing causes.
Here are some examples of using unless in goal setting.
I will stay in this job for 6 more months unless my three things happen: my solution engineer leaves, I do not get my pay increment and market conditions change.
I will continue to be friends with X and work on our friendship. If our situation does not improve by October, I will stop being his friend.
I will date Mary from January to end of March. By end of March, if I do not see evidence that she can be a good long term partner, I will end the relationship gracefully.
Annie Duke advises us to approach decisions by first setting a timeframe
Firstly, we need to set a time frame. “How long can I tolerate this, or how much time do I need in order for me to actually get the information that I would need in order to be able to make a decision?”
And from there, coming up with what we need to see in order to stay or walk away “What are the benchmarks that this thing would have to hit in order for me to feel like I ought to continue? And if it doesn’t hit these things, then I should walk away.”
It is important to do this in advance and before you enter the situation. This is because the hardest time to make a quitting decision is when you’re in it as we’re too emotionally involved or invested in the decision.
3. Measure options based on values
When we make a decision, we’re making a forecast of the future value it has to our lives.
No matter whether you are thinking about buying stocks where wins and losses are measured in money, or you are thinking about who to commit to, where wins and losses are measured in happiness and quality of life, expected value is a helpful concept for determining whether the path you are on is worth sticking to.
As Annie Duke explains:
“So I just said to her, “Well it’s a year from now. You stay in the job you’re in, what’s the probability you’re happy?” And she said, “Zero percent.”
She had enough experience to say that with confidence.
So I said, “Okay, if you switch to the new job, it’s a year from now, what’s the probably ability you’re happy?” So, “I don’t know, that’s kind of hard, but probably 50-50.” And I just said, “Okay, so would you rather have a 0% chance of happiness or a 50% chance of happiness?”
And then she got it and she switched, but she was so concerned about the 50% chance of being unhappy, that she had been having a terrible time trying to decide whether to switch.
If you figure out that another path carries a higher expected value, then walking away from the path you’re currently on and switching to the new one will get you to where you’re going faster.
4. How to overcome the sunk cost fallacy
There was a young lady who queued up to buy a bowl of noodles for 30 minutes. When she finally got the bowl of noodles, she realized it tasted horrible and had way too much MSG.
She threw the bowl of noodles away after one mouth. Her friend was shocked “Why did you do that when you spent the last 30 minutes queuing up and paid $5 for this bowl?”
The young lady replied “I already incurred the cost of $5 and lost 30 minutes. Why do I want to suffer the next 15 minutes finishing this bowl of noodles which tastes bad and incur damage to my health”
In this case, the friend is experiencing the sunk cost fallacy. However, the young lady is looking at the situation in terms of opportunity costs.
In your life, you might be experiencing the sunk cost fallacy if you hear yourself thinking “We can’t fire her now, she’s been with us for many years” or “I can’t close my position, I already lost $10,000”.
As Duke explains
“Sunk costs snowball. The resources you have already spent make it less likely you will quit, which makes it more likely you will accumulate additional sunk costs, which makes it again less likely you will quit, and so on. The growing debris of your prior commitment makes it increasingly harder to walk away.”
It is important to look at the bigger picture
When we start something, whether it’s a job or relationship, we open up a mental account. When we exit that thing, we close that mental account. Nobody likes to close this account on losses.However, to look across the gains in one mental account is short sighted. What really matters is maximising your expected value across all the things you start, across all of your mental accounts.
In investing, that will be like losing 30% in one stock but making 10% growth in your overall portfolio. In relationships, it is losing 2 years of effort in this person but gaining a lifetime of happiness by taking steps to find someone suitable.
5. Regret Minimization Framework
One of my favourite frameworks for decision making is Jeff Bezos’ “Regret Minimization” framework.
In a nutshell, when debating within yourself as to whether or not you should do something, the question Bezos asks is,
“At the end of my life, will I regret not having done this?”
If the answer is no, well then it’s probably not worth doing. But if the answer is yes, or even “maybe,” then there’s your answer.
For Bezos, the question was whether to leave his comfortable job working at a hedge fund to build Amazon.
When faced with a hard decision, developing a framework through which to make decisions is crucial. Instead, what most people do is procrastinate. Or they avoid making the decision which ironically is a decision in itself.
This “Regret Minimization” framework can be instrumental in helping you make big decisions in these core areas of your life.
Decision-making is a skill. It’s something that must be practiced and refined over time. The more we make tough decisions, the better we get at it. We learn to fail fast, cut our losses and be okay with it.
If you are struggling with life decisions, I hope that these tips will help you to stay open and consider your decisions carefully on whether to start, stay or quit.
Ending this post with one of my favourite quotes from Maye Musk in her autobiography, A Woman Makes a Plan:
“When I think about every bad situation I’ve been in, I can see now that I should have gotten out earlier.That moment, when you realize a situation is not a good situation, and it’s not going to change: that’s when you have to decide to get out of it.”