I've been there three times and everything is MUCH more expensive than you'd ever imagine!

Some people bring a lot of food with them to avoid costs. This might work well given you will have a car.

HI amcquiggan,

All the food was expensive there, even in the supermarkets--probably the priciest part of our trip this past July, but we rented a hotel room/studio with a kitchenette so we could eat breakfast in and pack lunches to take on the road. That saved some bucks (and time too.)

We rented a regular car through the Budget website, and it was no more than in any other European country. If you're planning to go into the interior you'll need a four-wheel drive vehicle, but if you're just going to cruise around the Golden Circle area, a car is fine.

The main highways in the Golden Circle areas are well-signed and it was easy to navigate. I think the only time we got lost was in Reykjavik!

Most of the big tourist attractions in the Golden circle area--the geysers, waterfalls, Thingvellir, are free. We did a transportation/admittance ticket to the Blue Lagoon (this was before we picked up our car), and took two tours--a puffin tour and a snowmobile tour. I don't remember prices, sorry.

I thought our hotel room/studio at Room with a View in downtown Reykjavik was a good deal--$145/night--they have $99 rooms as well, don't know anything about them. We did see people camping all over the place if you're into that (I'm not.)

I recommend you get a good guidebook--we used the Rough Guide, figure out the kind of trip you want to take and go for it!

Have fun! Iceland is beautiful and unusual and I can't wait to go back!

Patti

I didn't go to any restaurants while I was in Reykjavik. I just went to the grocery store every night. I ate a big breakfast at the B&B, skipped lunch and then went to the store. I kept my food cost to less than $10/day.

Patti, it sounds like your room was the priciest part of your trip. I agree Iceland is a unique and beautiful land. I will be back as well.

You didn't specify how many people are "we". Assuming you are a couple, I would calculate as follows:
Accomodations - about 120 USD per day for modest places (not camping).
Car rental - around 70-100 USD per day.
Gasolin, food etc. - 60-70 USD per day for very modest eating.
Driving around Iceland is very easy. The traffic is usually very light.
Don't drive by yourself, even with a rented 4WD, into the interior of the island. There are practically no roads, and the dirt roads are unmarked and unsigned. We saw several 4WD vehicles that got stuck in rivers they tried to cross. We helped 2 of them to get out. It was quite frightening. Take a "superjeep" tour with a trained driver-guide for at least one day trip to Landmannalaugar or thorsmork from Reykjavik , or to Askja from Myvatn. All 3 trips are amazing. Expensive but they were the highlight of our Icelandish experiences. We were there 3 times. There are many companies that offer those trips. We used Highlanders and were very happy with their services. But there are many other companies that offer the same trips. You'll miss a lot of Iceland's beauty if you decide not to take one of those trips. I know that those superjeep are a realiy big expense. But still highly recommend taking them.
I would save money by renting a small car for travelling around the island, you really don't need anything big for that, and use the money saved for a 1 day guided superjeep tour as described.
By the way, since there are not too many accomodations around Iceland, you have to reserve them in advance. If you have any questions concerning that subject or any other, feel free to post them and I'll try to answer them.

Thank you, everyone, for the valuable information. I really appreciate it. My husband and I are really looking forward to our trip.

About accomodations: I have not been able to locate very many bed and breakfast places online. I am guessing that there aren't many.

So how do you locate places to stay before you get there?

Do people usually stay in one place and use it as a base, or is it more beneficial (and less time consuming) to use different accomodations along the way as you tour different parts?

Any suggestions on places to stay that are friendly, average prices (preferably breakfast included, but not essential), nothing too fancy.

Thanks again

In Reykjavik, Room with a View is a good choice
http://www.roomwithaview.is/
No breakfast but since it is on the main street of Reykjavik, you won't have any problem getting food and eating in the room. The only drawback is the parking. It is free overnight but diificult during the day. If you are interested in a small hotel (with breakfast)in a great location, try Hotel Leifur Eiriksson
http://www.hotel.is/hotel.asp?id=10
On a 10 day trip, I would stay the first 2 nights in Reykjavik, use one of those days to drive to Gulfoss, Thingvellir and Geysir. Then drive the full circle around the island.
You absolutely have to reserve accomodations in advance. The most popular places to stay (and most of the time the only available) are the farmstays. Those are also, most of the time, the only dining places available. 2 years ago we paid around 100 USD per night per couple for B+B. Dinners are available too for additional cost. You can find a list of them on the net. A much easier and efficient way to do it is by using a local travel agency. We used once Iceland Travel and were not pleased at all by their services. The other 2 times we used Nonni Travel and loved it! http://www.nonnitravel.is/contact.html
I would spend the last night in Reykjavik.
You will miss a lot of Iceland's beauty if you stay all the 10 days in Reykjavik. Iceland looks small on the map but it is not.
More questions?

You have got some good information so far. I can also recommend Room With a View for good quality, inexpensive lodging. An advantage of this is that it is situated on the main street in Reykjavik and there is a supermarket close by. I didn't notice that the supermarket costs were all that high but it's certainly a way to cut down on your costs.

Most of the things you will see are free so you will save that way compared to spending on another trip.

Iceland is easily one of my favourite countries so I hope you don't get put off by the costs and make it there for your trip in June. Remember that the bulk of the costs (airfare, car hire, accommmodation) are fixed in advance and (maybe exchange rate dependent) so you shouldn't get too many shocks when you arrive.