I am in your same position right now as far as Europe goes, and I think (know) you can do it.

I am here for 4 months, visiting 14 countries. My budget is $4,000.

PLAN AHEAD.
use eurolines, the bus system - it takes longer, but costs 1/4 the price.

buy things at a grocery/market.
eat 2 meals a day.

public transportation is almost never REALLY necessary unless you have your pack with you.

go while you are under 26 as museums, etc. will be far cheaper. if possible, get an ISIC card or something similar for proof of your age.

europe is a lot of fun, and can be really cheap, just plan ahead.

I also want to mention location of places to stay...the farther out you are the cheaper the hotel/hostel - but the more you may need to spend for transportation and time spent commuting to the interesting parts of cities.

My son traveled in Germany and France for a few weeks after he graduated from high school.
When we questioned him about his repeated requests for more money, his reply was "there are lots of hidden costs in Europe - like bottled water and discos"

We still laugh and use that line often.

Thanks to all. It sounds like I need to either: budget more for a Europe trip, go to South America instead, or reduce my length of stay so that I can spend more per day.

Or consider something diffent. I've always wanted to see India...

Thailand's cheap.......

Well, if you've always wanted to see India, then go. It's amazing! And yes, cheap.

India is very beautiful, with varied cultures, landscapes and architecture. It is amazing with warm people. It is multi- dimentional.
Above all, It is very reasonable.

luke7777, just a suggestion. Some flights to India from the US have a connection somewhere in Europe. Maybe you could travel to India with a stopover in Europe. Why not check flight prices, and see what your options are for stopovers. This way you can travel around India and you'll also be able to see a little of Europe. The flight to India will cost more, if you spend more time in India and less time in Europe you could vacation within your budget.

Sign up as a member on easyjet - they offer occasional very good specials on flights within Europe. I've just booked a heap with a 30% discount for Winter 2010 time. We've budgeted on approx $150 AUD/night for accommodation for our 3 1/2 month trip. With the occasioanl 'splurge'. Remember that hostels aren't necessarily the cheapest option. Use your investigative skills well in advance in this regard. We've also saved a bit by booking early PREMS train tickets. Eurail passes are a rip off I've decided. Anyway, we haven't been yet, but I guess it might be helpful to let you in on how we're trying to save $$$ too.
All the best

In my youth, more than two decades ago, I made two multweek trips to Europe, first with girlfriend and then boyfriend (and now husband). We had almost NO money on either trip. Totally tight budget. Costs are more now but we had two great trips and the ways we kept cost down still work:

a) camp - by far the cheapest, there are lots of campsites, many of them wonderful.
b) we almost never ate at a restaurant. Maybe once every four or five days at maximum. Delis and markets have lots of good food to go. Ate a lot of cheese, roasted chicken, bread, and fruit. It was fantastic.
c) in many countries (eg France), museums are free one day a week. Plan that very carefully to take advantage.
d) Just walk around, be like a local. I would never ever - even now - do expensive tourist traps like the Tower of London.

Texastrips - I'm curious as to whether you have actually been to the Tower of London? It's quite fascinating. I won't deny that there are some touristy aspects, but it's got tons of history. Surely you wouldn't write off all major attractions simply because they cost money and a lot of people like to visit them.

"<i>I would never ever - even now - do expensive tourist traps like the Tower of London.</i>"

Well it is very obvious you've never been inside the place. That is one of the 2 or 3 silliest things I've seen posted on Fodors -- EVER . . . .

So is the Vatican a tourist trap too? Or Yosemite National Park? Or the Louvre? All charge pretty high admission charges . . . . .