bad investment

I went to graduate school with another woman who, let’s just say, didn’t end up with the same happy experience that I did. Very early on in the program, it became clear that the program wasn’t a good fit for her. Despite what the school said when they were wooing her, they weren’t really interested in her research interests, she had a hard time finding an advisor willing to help her, and the program wasn’t geared toward the practical job applications she’d hoped for. (It was a training ground for academia, not the real-world.)

She told me that she thought she’d done everything right. She’d researched the program, talked to former students and current faculty and felt like it would be a good fit. But it just wasn’t. She tried to stick with it, figuring she could just gut it out, get the degree and move on. She kept paying tuition, long after it was apparent that things were going downhill. Finally she was so depressed and miserable that she had to get out. Making things worse was the fact that her advisor bailed on her mid-thesis, meaning she’d have to start over and add another year (and more money) to the program.

When we talked, she said, “I hate to quit. I’ve spent so much money and to leave with nothing feels like failure.” I told her that, while it was up to her, she had to decide which was worth more: Her sanity, health, and happiness, or the degree. She ultimately chose to quit. The last time I talked to her was about a year after she left and she was much happier. “Even though I lost all that money, I still feel better than I have in a long time.” This happens to a lot of us, at least once in our lives. We get into a bad investment. We enroll in a degree program that turns out not to be a good fit. We end up in a house in a neighborhood we hate. We buy something like a timeshare that we’re sure we’ll use but end up never using. We start a business that flounders. Whatever it is, most of us end up sinking a lot of money into something that just doesn’t work out.

The temptation in this situation is to keep throwing money at the problem, hoping that things will get better. We hope the investment will turn around. We hope that the neighborhood will get better, or at least we’ll learn to live with it. We keep paying dues on the timeshare hoping that our work schedule will free up so we can travel more. We hope that business will pick up. And, like my friend, we may keep paying tuition in the hopes that we can at least survive until we get the degree. We don’t want to admit we made a mistake.

That’s natural. Most of us don’t want to quit on something we’ve spent a lot of money on. And you do need to give things a solid try and seek ways to fix the problem before you bail out. Is the problem with the neighborhood as a whole, or just with one neighbor? If it’s just with one, can you talk to the person and try to work something out before you move? Is the problem with the problem with the investment itself, or is there something in the fine print that you didn’t understand that could make a difference? Is the problem with your business that there’s no demand for your product, or are you not marketing yourself correctly? Can you do something different? Is the problem with the whole degree program, or just one professor? Is there a way to cut that person out of your program? You may be able to salvage something if you ask careful questions and try different actions.

If the situation just can’t be fixed, though, the best thing you can do is pull the plug. Don’t keep spending money out of some misplaced sense of obligation or desire to “see things through.” Sure, you don’t want to be a quitter, but when something is an obvious bad fit or failure, it’s better to take your losses, learn from the mistake, and move on. Otherwise, you’re just throwing money away on something that makes you miserable, or which isn’t providing you with the benefits that you thought it would. This toxic thing is draining your cash and you need to stop it.

And you might not be out as much as you think. My friend still had the credits she’d amassed that could be transferred to another school. She also had some non-monetary gains. She made new friends and contacts, she learned a lot of material, and she got a better perspective on what she might want to do with her future. The experience wasn’t a total waste. If you have a house you hate, you might still be able to turn a profit on it, or maybe you met a least one decent person in the neighborhood who turns out to be a lifelong friend. That timeshare might work better as a rental, giving you enough income to at least break even while you wait for more relaxed days ahead. With a failed business, at least you learned some things about running a business that you can apply to a venture that’s a better fit.

At the very least, you’ve learned something that will prevent you from making the same mistake in the future. Learning through the school of mistakes is the way most of us learn best. You can learn a lot more about yourself, life, and money through a big screw up than you can from more carefully controlled lessons. There’s value in that, even if it doesn’t seem like it when you decide to walk away.