Indexed payment plans: gold, currency, inflation
Track a debt between two people indexed to gold, the euro or the consumer price index. Instalments follow each month's value; every change is in the ledger.
Updated Tuesday, October 6
Money lent for a year does not come back worth what it was. You hand over $25,000 in January and by the following January the same money buys less; whether that matters depends on how much less. A fixed repayment schedule quietly hands that loss to whoever lent the money, and almost nobody wants to be the one who raises it at the dinner table.
An indexed plan settles the question at the start instead of at the end. The debt is written in something that holds its value, and each instalment is worked out from the current value.
The three indexes
Gold-indexed
The debt becomes grams of gold on day one. Lend $25,000 when gold is $104.17 a gram and the debt is 240 grams; across twelve instalments that is 20 grams each. What the borrower pays is whatever 20 grams cost that month.
| Instalment | Grams | Gram price that month | Pay |
|---|---|---|---|
| 1 Feb | 20 g | $118.60 | $2,372.00 |
| 1 Mar | 20 g | $125.40 | $2,508.00 |
| 1 Sep | 20 g | $142.50 | $2,850.00 |
The instalment was worth $2,083 the day the loan was written. The grams never moved.
Currency-indexed
The debt is anchored to another currency at the starting rate. Useful when one of you earns or spends in that currency, or when the money is going to be needed abroad. The plan shows both numbers: the anchor amount, which never changes, and the local amount, which does.
The same $25,000, anchored to the euro at 1.0417, is €24,000, so €2,000 an instalment.
| Instalment | Base | Rate | Pay |
|---|---|---|---|
| 1 Feb | €2,000.00 | 1.0940 | $2,188.00 |
| 1 Mar | €2,000.00 | 1.1210 | $2,242.00 |
| 1 Sep | €2,000.00 | 1.1619 | $2,323.80 |
Inflation-indexed
The debt follows the consumer price index. Each instalment is the original amount scaled by how much the index has moved since the plan started, so nobody has to argue about what a fair rate would have been.
| Instalment | Original | Index change | Pay |
|---|---|---|---|
| 1 Feb | $2,083.33 | +1.1 % | $2,106.25 |
| 1 Mar | $2,083.33 | +2.2 % | $2,129.17 |
| 1 Sep | $2,083.33 | +3.4 % | $2,154.17 |
With inflation this low the numbers move gently. In a currency losing a fifth of its value a year they do not, which is where indexing earns its keep.
How recalculation works
Every plan has a schedule. It holds the instalment dates and, for each one, the base amount kept in the index, whether that is grams, anchor currency or the original amount.
Each month the plan gets that month’s value: the gram price, the exchange rate or the index. The plan works out what is owed from the base amount, and a payment uses the latest value in the plan. For gold and exchange rates the day’s value comes in with one tap, and in a lira plan so does CPI.
Nothing is overwritten quietly. Each recalculation, each rate used and each payment is a line in the plan’s ledger, and both people see the same ledger.
Partial and early payments are recorded as such, and a month with no payment carries over to the next. The ledger tracks the remaining base, not just a dollar figure.
Where the values come from
Gold and exchange rates come in with one tap, and so does CPI for a plan in Turkish lira. When you set up a lira plan you pick the rate you agreed on: TCMB’s forex selling rate, its buying rate, or the ECB reference rate. Other currencies use the ECB reference rate. Gold is priced from an ounce price blended across several central banks, converted to lira at TCMB’s selling rate. A currency the ECB doesn’t publish also gets a blended value. A blended value is labelled as one. Every rate shows its source and date. If you agreed on a bank’s rate or a gold dealer’s price, enter it yourself each month. Lira CPI is TÜİK’s general index on base 2025=100, and each month takes the index of the month before. In other currencies you enter CPI yourself, from that country’s statistics office. A wrong value can be corrected, and every correction is logged where both of you can see it.
The other three types
The same steps also make plans with no interest, and plans with fixed or variable interest: six calculation types in total. Pick the one that matches what you actually agreed.
Start a plan
A plan needs two people and a schedule, and takes about a minute to set up. From a group balance, Create plan on that row opens the wizard with the amount filled in.