One of the reasons for this trip is to experience a different regional economy. This is the first E on my STEEPLE chart. So I’ll be testing my $1,000 static budget index. I probably have to bump it up a bit, but Mexico did not pass the test. Well, Oaxaca did when I did not drink, and avoided restaurants completely, and meat mostly. Guadalajara does not come close. Forget Mexico City. Probably forget Monterrey, and there are other lifestyle issues.
So, in Medellin and the other cities (there are like 3 or 4 that I have to visit), I’ll be looking at.
Currency issues. That was something I never looked at before, but it’s adding 25% to my relative costs.
Apartments
Banking
Food – markets
Food – restaurants
Transportation costs
Other.
The dreaded OTHER.
The currency moves of the Mexican peso – strengthening from 20 pesos (they annoyingly use the same $ as the US, so it gets confusing) to the USD up to 17.5 now. That’s a pretty big hit from what is usually a pretty obscure datapoint.
So, it’s important to look for the unseen. Stuff you know about but don’t consider much. It’s the thing that can make a perfectly good option go Thumbs Down in a hurry. The tricky bit is you are never the ones that are about to affect your life. You only see the last one.
Yes, they have studied this.
Here is what experts say. High-impact, unlikely events are the ones that can ruin your world. (Experts in question were a Shell Oil strategy team sometime in the 70s or 80s).
Here is how to do this: Divide your world into 4 boxes. On the horizontal axis is the likelihood of a thing happening within a time period (that you will decide on. 1 year, 5 years, maybe 10. This is the time frame for your project or decision, so keep it manageable). Your Y axis going up and down is the degree of impact it will have on your business/life / mental health. Make the high ones Big Impact and the low-end Small Impact.
So now your potential world is divided into four categories.
- Highly likelihood, High impact.
- High likelihood, Low impact
- Low likelihooe, High Impact
- Low likelihood, Low impact
Then start thinking about events or issues or situations that could fact your issue. You will want hundreds. This is often a team exercise, but we are not drilling down to too much detail yet. For now, but rapid-fire potential headlines or email subject lines ideas, and see which box they end up in.
Spoiler alert – Known problems dominate your early results.
Your first dozen or so will be known problems. (High Impact / Highly Likely) This makes total sense.
The next most common: (Lower Impact / Less Likely) Same frequency as the known problems, but we do not think about them as much…because they’re low impact.
Then the big one for us: (High impact / Less Likely). There are the events that are not on your radar, but they pack the same punch as the well-known problems that you dread. The difference is that you either do not see them coming or don’t understand the potential impact.
For me in Mexico, my OTHER was currency. Were there other things going on? Of course. Millions/Tons. Were some of them positive or low impact? Yes, but they were pretty easy to disregard. Were there known challenges? Yes, and that is pretty much all I talked about with the other expats for the first year. Obviously, the minimal-impact events that I didn’t see coming were pretty unimportant.
A major currency move against the US dollar was not something I expected. But it is having a significant impact on my lifestyle and business plans.