Think you need to spend a $Million to make a great sounding CD? Think again. You can get started in your own home music studio for less than $2,000 with the following:

1) Computer – Since just about everyone already has one, I’ll assume  you do to. You’ll need 4GB of RAM to do it right (at least).
2) Software – Recording software is the cornerstone of the recording studio. There are multiple good ones to choose. I use the widely popular Pro Tools. [You can buy an MBox including Pro Tools for less than $200 on EBAY]
3) Interface – This may come in the package when you buy the software (i.e. MBox with Pro Tools). This is the translator between your instruments and the computer.
4) Mic – MUST have a condensor mic. The minimum should be in the $300 range from the likes of AKG or Audio-Technica.
5) MIDI Keyboard – This is the workhorse of the studio because it will be your strings, piano, drum triggers, bass, and almost everything else that is not a guitar [MIDI Keyboard under $300].
6) Instruments – Whatever your favorite recording instruments are (guitars, etc.). Price depends on what you like.
7) Monitors – A good set of monitors is crucial [plan on at least $250 (if you find a good used pair)].
8 ) Headphones – You need a good $100 set of headphones for mixing and recording.
9) Accessories – Mic stands, guitar stand, shock mount for mic, etc. Plan on a couple hundred for the little stuff.
10) Cables – Save the pain and get Monster cables or equivalent that DON’T make noise. Otherwise you’ll drive yourself insane [estimate $200).

So assuming you have a computer and an instrument to play, the total comes to  $1,550 so far, and that’s enough to get you doing some good recording. The rest you can build as you go (and as you can afford).