The great thing about digital recording is that it levels the playing field--the only difference between you and the big boys is that they've got expensive tools that make recording a bit more convenient. But if you're patient and willing to experiment, you'll find that the music you record at home sounds just as good as 90 percent of what you can find at your local mega-music store.
This guide assumes two things: that you've already got your guitars, amps, etc., but that you don't have any real recording gear, and that you either know how to use a computer or have the willingness to learn.
All of these items can probably be found used for lower prices on eBay or through your neighborhood music store. Personally, I tend to borrow equipment from my serious music nerd friends when I need to do live recording. But if you don't know any serious music nerds, this should get you started.
First of all, you want a computer, not an outboard hard-drive recorder. Why? Because for the same price as an HD recorder, you'll get a box that not only records music, but surfs the Web for porn. And that's really important.
Ideally, you'd want to get a Mac for this, because Macs have excellent audio hardware built in. But you're on a budget, right? So get a PC. You can find perfectly suitable Windows-based computers on Pricewatch.com starting at $400 and going up. You want to look for very big hard drives, as you'll be using a lot of storage.
Plextor CD burner ($60)
You'll probably want to burn your new tracks onto CD, right? Plextor is the brand to use--affordable, fast and, most of all, reliable. You want an internal IDE burner (external USB burners screw up an unacceptable amount of the time).
RAM is computer memory--and you want as much as your computer can take. Don't skimp here; fast RAM means more power and better recordings. Again, Pricewatch.com is the place to go for this.
Sound Blaster Audigy ($120)
The Audigy is the best affordable sound card you're likely to find these days. It features lots of bells and whistles, like 6.1 surround sound--but for our purposes, it's great because it can record (and playback) 24-bit audio, which is higher than CD quality. Even so, we still want an external interface for our plugs and microphones, which brings us to our next item.
Digidesign MBox ($500)
Digidesign makes ProTools, which is the industry standard for recording hardware. Unfortunately, the full version starts at $10,000. Luckily, they also make the MBox--an external USB-based interface and preamp. It's stripped down, but unless you're planning to record 40-piece orchestras live at Carnegie Hall, it will probably be suitable for your purposes. It's got built-in microphone preamp and phantom power, and enough bells and whistles (like MIDI inputs for synths) to keep you happy. Plus, it's portable--you can plug it into a laptop for pro-quality live recording.
Oktava MK319 Microphone ($100)
A good microphone is one of the most important elements of your studio, and the Oktava is a damn-good condenser mike, straight out of the former Soviet Union and using the same electronics as ultra-expensive Neumann mikes. Add a $20 boom mike and a $20 pop filter (to protect your recording from popped consonants) and you're good to go.
Behringer MDX1400 Compressor ($70)
A compressor keeps dynamic recordings (like vocals) from going too high or too low. Without a compressor, your vocals will sound like ass--trust me on this, I learned the hard way. The Behringer is a decent low-end compressor that gets the job done.
Cakewalk SONAR ($400)
The MBox comes with a light version of ProTools that's limited to eight recording tracks. But digital isn't about limitations, right? So pick up SONAR, which has all of the features of a high-end recording package like Cubase for a much more moderate price. SONAR will allow you to record and edit audio and MIDI, and apply software effects all in real-time. It's the perfect finishing touch to complete your low-budget home studio.
Rock 'n' roll.