Save money: Buy a great used bike on craigslist cheap!
I definitely appreciate the quality of a nice bike, and I've recently been keeping an eye out for a nice used bike for one of my children since paying hundreds of dollars for a new one that could be outgrown quickly wasn't terribly appealing to me. I've been watching the listings for used bikes at craigslist for a few weeks and finally picked one up a couple of weeks ago.
I ended up buying a 2004 Giant MTX 225 mountain bike that had been sitting in a backyard shed for $60, which would have cost $200+ when new. Overlooking a few scratches, a flat tire, a broken front brake, and a rusty chain and spokes, I felt that I had a bike with really good bones to work with.
I needed to replace a few parts, so I plunked down $17.58 for a new 24" tube, a chain, and a V-Brake noodle and one evening I cleaned her up (also using some WD-40 and fine steel wool on the rusty spokes), installed the new parts, and adjusted the front and rear derailleurs and brakes. Once finished, I had a really nice bike on my hands for an out of pocket cost of $77.58 (not including the cost of the trip to pick it up).
I'm not exactly an expert bike mechanic, but I was able to figure out how to do the work after a little reading at sheldonbrown.com (a very informative site, whose creator passed away earlier this year) and the How to Fix Bikes blog (see the "How to Replace a Chain" video below). The whole process was fun, educational, and rewarding, and the end result was a great bike for less than the $100 a cheap department store knockoff would have cost me.