How Frugality Can Turn Cents Into Dollars : Money: Take a sack lunch to work. Or shop with coupons. Many investment advisers are advocating spending less on credit as a way to save.

In these days of puny interest rates and economic uncertainty, the best investment may be no investment at all.

That doesn’t mean that you shouldn’t invest. It just means that a penny saved is a penny earned. Nothing beats not spending.

Granted, “don’t spend money” isn’t the sexiest investment advice. It’s certainly not as much fun as spending, and it may entail sacrifices. What’s more, good individual behavior may not be so good collectively: Consumer tight-fistedness is one reason the economic recovery has been so slow.

But another reason for the slow recovery is the excessive indebtedness of American consumers. The best way out of debt--and into savings--is to spend less.

Let’s say you started bringing lunch from home. You could easily save $3 a day. That’s $15 a week, $62.50 a month--or $750 a year, counting vacation. If you invested that money monthly for 10 years at 6%, you’d have $10,294.

Many investment advisers are pushing this kind of new frugality.

“It’s not hard to get that answer when rates are at 2% and 3%,” says Gregg Ritchie, a partner with the KPMG Peat Marwick accounting firm.

Personal finance guru Andrew Tobias is a well-known cheapskate.

“I’ve been saying this for 20 years now,” he says. “When Ben Franklin said, ‘A penny saved is a penny earned,’ there were no taxes. Now that there are income taxes and Social Security taxes, a penny saved is not two pennies earned, but it’s pretty darn close.”

Tobias has a point. We’re talking about after-tax money here. Just as in a business, cutting expenses is an easier way to boost profit than increasing revenue.

“To come out a dollar ahead, you could earn $2 and have $1 left after FICA, income tax and California state tax,” says Tobias. “Or you could save $1 by shopping a little smarter, by perhaps becoming a jogger instead of a skier, which would save a fortune, etc., etc.”

A small crop of newsletters with names such as Tightwad Gazette and Penny Pincher have sprung up extolling the virtues of thrift. Besides advice, commentary and reassurance, they tell subscribers how to get stuff for nothing or next to nothing.

Mary Hunt of Garden Grove started the Cheapskate Monthly early this year to convert others to her spend-less philosophy. She knows the territory well, having run up $100,000 in credit card bills before she saw the light.

“The newsletter teaches people how they can live on less,” Hunt says. “I’m the head cheerleader to help them to start living within their means.”

There are many ways to become a born-again tightwad. The first priority: Get rid of debt. High-interest credit card debt is so bad that it pays to use savings to eradicate it.

“People don’t think of investing as paying down debt, but in today’s environment, that’s the No. 1 place to work,” says Ritchie.

Consider what businesses call debt restructuring as well. Look into refinancing your mortgage at a lower rate. Also look at replacing a 30-year loan with a 15-year loan, Ritchie advises. If you can’t do that, try sending a little extra money each month, which will reduce the principal.

Next, don’t take on any more debt. If you use your credit cards, pay off the entire amount before the month is over. Better yet, save first and buy later.

“Buying a car for cash and not having to pay the finance fees is a good way to earn the 8% or 9% that an auto loan would cost you,” Tobias notes. “It’s hard to find an 8% or 9% return these days.”

Hunt took her own advice recently when she needed a new freezer: “We saved for a few months and bought it at a discount warehouse that doesn’t take credit cards.”

In his new book, “The Frugal Shopper,” consumer advocate Ralph Nader says that shopping wisely is like giving yourself a raise. Co-written with lawyer Wesley J. Smith, the book includes such shopping don’ts as:

* Credit card insurance: It costs a lot and delivers little.

* Service contracts: Unless the merchandise is shoddy, a decent warranty should be enough protection.

* Lax car maintenance: A properly maintained car needs less repair.

* Shopping without a list: Supermarkets are designed to encourage impulse buying.

Ilene Birnbaum says friends sometimes tease her about her penchant for penny-pinching. They might find fault, perhaps, in the way she recently cleaned out her neighborhood Target store’s supply of extra-large bottles of Cranapple juice during a rare sale of the drink.

“I don’t like to buy anything if it’s not on sale,” she says.

To save money, the 27-year-old West Los Angeles accountant lived with her parents until a few months ago. She regularly takes lunch in a brown bag and even brings soda from home to avoid costly vending machines.

She searched for a credit card with no annual fee, and she pays off the balance each month. Birnbaum clips coupons and organizes them in a special wallet, which prompted a mini-crisis when she thought it was lost not long ago. The wallet turned up in time for shopping day.

Because of all that, Birnbaum was able to plunk down $20,000 for a car recently with only a slight assist from her mother.

“I got a very good deal on my car, and I got exactly what I wanted,” she says.

The good thing about saving money as an investment strategy is that it isn’t rocket science. Anyone can do it. Most of the relevant advice is pretty standard.

* Shop smarter. Use coupons, but only for things you would normally buy, not for promotional items, which manufacturers frequently introduce with coupons to build a following. Buy in bulk. Compare prices. Shop around. And never be afraid to haggle.

* Determine what you actually spend. This could be as basic as keeping a small notebook for a month in which you record every penny you lay out.

* Dissect your expenses to find excess. “There are things that people treat as mandatory expenses. It’s like the federal government--there are things you just can’t cut,” Ritchie says. “But in reality, there are very few things that are mandatory expenses.”

Cable television is a good example, he says.

“Gee, 10 years ago our antennas worked really well,” he says. “Is $20 a month worth not being able to watch ESPN?”

Car-pooling or working at home also are good ways to cut back. “There are plenty of people who are car-pooling to save money rather than to save the environment,” says Ritchie.

Robert Sauceda, a combat shopper nearly all his life, does lots of things to save money.

Most weekends find the 39-year-old father of three cruising yard sales, swap meets and outlets for buys. Sauceda furnished the living room and family room of his Whittier home that way, “and it all matches, pretty much.” His 6-month-old son is wearing near-new sleepers picked up for a fraction of the original price at a recent yard sale.

“Sometimes it’s amazing the things that can be found at swap meet and yard sales,” says Sauceda, a computer consultant. “I relish it when I get a good deal.”

It doesn’t always work out. A favorite story in the Sauceda family recounts the time little Robert, as a boy, biked to the store to buy his mother three heads of lettuce for $1. While he was in the store, someone found a bargain in Sauceda’s unlocked bike.

“My sister loves telling that story,” says Sauceda, whose love of bargains survived the ordeal.