I am a big believer in calculating return on investment. In accounting parlance:
ROI = (gain from investment – cost of investment)/cost of investment
But in layman's terms it means calculating the efficiency of an investment. It's the ratio of money gained (or lost) relative to the amount invested, it shows whether or not you're getting the best bang for your buck.
For years I have stacked up savings by using a rewards credit card for every single possible purchase. I realize this violates one of Dave Ramsey's ultimate principles, but given a single character trait — self-mastery — credit cards are amazing tools. For decades I have used rewards cards to earn cash back, discounts, and frequent flier miles. As long — and this is a huge caveat — as you don't buy more than you would otherwise and always pay the card balance in full before the due date, this strategy can put you way ahead.
I just learned about a similar way to earn money for college: Upromise.
Now I have heard of Upromise before, but didn't know any of the details. Learning more about it, I've found it fits nicely with the savings method I've been using for years. Upromise has a number of savings methods. You can earn money money for college with:
- Online shopping — 1–25%
- Dining — up to 8%
- Grocery — up to $40 per month in coupons
- Upromise credit card — 1% back on all your purchases
You can redeem your rewards in myriad ways as well. You can:
- Grow it in a high-yield savings account — with a 10% match!
- Invest it in a 529 plan — this is a tax-deferred education savings plan run by state governments, every state has at least one
- Pay down a student loan — if you have a current student loan, you can use these easy rewards to help pay off your debt!
- Get a check — keep it simple, just get a check and use it for any school expenses
If you have college kids (this year I will have three!) or are a college student yourself, Upromise is a great way to help with those expenses. To date members have received more than $600 million for education!