My boyfriend and I spent 3 weeks in Europe last August. We went to Dublin, Paris, Rome, Venice, Milan, Florence, and Gothenberg, all for under $4000 each, including flights. (We also went to London, but were lucky enough to be staying with a friend, otherwise the budget would have been much higher)

The three major expenses in a Europe vacation are:
food
shelter
transportation

If you plan well enough in advance, you can find great deals on transportation and shelter. We stayed in very nice hostels every night (save one night on a campground in Florence), and paid roughly 35 Euros a night for the two of us.
We took advantage of some great RyanAir deals, including a 0.01 fare from Milan to London, so including the airport fees, we spent 30 Euros on the flight for both of us.

Food can be VERY pricey, but there are ways around it that are very similar to the things you'd do at home. Things like eating a big lunch, getting take-out from restaurants, visiting markets, bakeries, and grocery stores, etc. will cut down on your food expense a fair bit.

And a note for anyone looking at getting a EuroPass for the trains around Europe - a lot of trains still charge reservation fees, even if you have a Pass. The passes are great for people who are winging their trip, but if you plan to be on specific trains, don't go this route. We would have saved money had we bought individual tickets, versus buying the pass and reserving trains in advanced.

The dollar is dropping like a rock in a river, setting a new ALL time low against the euro just a few days ago. Traveling to Europe is only going to get more expensive in the next few years. If you are going to visit, do it soon.

If you have family in Europe, tell them to come visit you. Even if you split the cost with them, you will likely save money.

One good way to save money in Europe is avoid the larger cities, Dublin is horrendously expensive but Galway is much more reasonable with beautiful countryside, beaches and restaurants. A lot of the cheap airlines fly into smaller towns in mainland Europe and it is a great way to discover new places.

My husband and I have been trying to get to Germany for FOREVER. At almost $1K per plane ticket though, we haven't mustered up the enthusiasm to go. Lower prices would be so awesome.

Location is by far the most important thing for the budget traveler. Not only does the proximity of your hostel to city center/attractions usually determine the cost per night, but the choice of which cities to visit (and how many) can be a major determinant of the cost. It's already been pointed out that Galway is cheaper than Dublin, and anywhere is cheaper than London, but you should also consider how many places you want to visit on the trip. While it's great to see a lot of different places, each new location trades off with time getting to know one city even better, and each trip costs that much more money.

This isn't to say that you can't get around Europe for cheap. I've seen ride-shares advertised on couchsurfing, and I hear craigslist is active in some European cities as well, but pay-for travel always has added costs. Reservations on top of rail passes (though you can often avoid this if you're willing to risk not getting onto a train - check the details for your route) and the taxes, bag-check fees, and out-of-the-way airport costs make the budget airlines less of a bargain than the .01c sticker price appears (though still worth it!).

There are advantages to the beaten path - the sites are likely to be open, you'll have little trouble getting around if monolingual, hostels will rarely be in short supply, you'll always be with a community of travelers - but you trade off so much. When traveling the standard Western European routes, or the recent Eastward expansions, in the peak summer season, you'll be paying more, dealing with bigger crowds, and seeing less of the place your visiting and more of the tourist culture that's taking over it for the time. Not that this makes Cinque Terre in July a bad decision, it just means that you might want to consider the Dalmatian coast of Croatia instead, or even Montenegro - a country functioning on the Euro but affordable nonetheless.

Hi David

You mentioned home exchange as a way of saving money on trips to Europe. Although most home swappers do it for more than money saving reasons (the convenience and space of staying in a real home rather than a cramped hotel room, to live like a local and get to really know areas away from the main tourist trails, to have one's own home cared for while away, etc), there's no doubt that home exchange is a great option when visiting expensive countries or cities.

The value of the pound has dropped considerably against the euro in recent months so please don't rule out a trip to my adopted city, London. I have been running a home exchange service here since 1985 and there's a very large number of attractive home exchange offers in the city (as well as homes throughout the UK, Europe and worldwide). Do have a look at some of the homes available for exchange: Home Base Holidays and check out the blog, Travel the Home Exchange Way for further information.

There's lots to do here that's free (most major museums, beautiful parks and walks, concerts). There are many, many pubs and cafes that serve good and reasonably priced food. And, if you plan carefully, you can still take in some of the more expensive tourist attractions (like the London Eye).

Spring has arrived and the parks are looking lovely. Do come!

Cheers.

Maybe it's just sour grapes for me since I can't afford to travel anyway, but air travel is one of the worst things one can do for the planet. It is terrible for greenhouse gases and it uses precious resources of oil in a big way. It actually distresses me to think that air travel may be increasing.