Solution: I found two products on Teachers Pay Teachers and then added my own special twist.
1. The Words: I've always wanted to differentiate the word list but was not able to manage it. I found:
http://www.teacherspayteachers.com/Product/4th-Grade-Differentiated-Spelling-Lists-Year-Long-Unit-267173
I love these lists because there are three of them for each week. All three share the same sight words. The first couple weeks of school everyone does the same words and then looking at the scores students are placed in list A, B or C. All lists are based on the same spelling rule.
2. The homework: These monthly spelling menus are cute and give students flexiblity. The best part they are good for any list. You choose how many points you want to assign. They also have a Spelling City option too.
ers.com/Product/Spelling-Contracts-Throughout-the-Year-797652
3. The Twist: Students who get 100% on list A, B, or 94% (one wrong on the hardest list C) does not have to do the spelling menu the next week. I post the 100% students on the board and my website. The students then study the words in their own way which works because I don't care how they learn them as long as they learn them. This eliminates 25%-50% of my grading spelling homework each week. Students love this!
I do grade the tests the same day, that's the only catch.
I hope you like my ideas!