I am looking at a VS Delta 8" grinder at Lowes, which has a white wheel and a gray wheel for $125.00; you will need a grinder to sharpen your tools. Given your "allowanceâ€, I would seriously look there because $70 at Lowes will be wasted otherwise. You can make your own sharpening jig and I can offer you some plans if you like. This will work until you think you need to buy a store bought jig. Home Depot will get you some sandpaper, Gorilla Glue, plastic storage boxes for pen kits and stuff. I would even grab some 8/4 stock maple to play on the lathe with.
Ok, so now your money's shot but I assume you can get some more "play-money" soon enough. If you thought to save enough Home Depot $$ to buy that maple stock, just start turning some, play with the lathe a little. Before you jump right into a pen, practice making something else, and a mallet maybe?
Do you have any lathe tools? I hear Harbor Freight has the boxed set of lathe chisels on sale again and are a great starter set ($36.00) I would personally add the transfer punch set to the order if you can; they are only $10 but will come in very handy.
Do you have any pen blanks or kits yet? I highly suggest that you try the dead center first; it is by far the cheapest way to get started. Watch e-bay you can find one for under $5.00. If you start with the cigar pen, you can use the standard bushings with the dead center. If you do not like turning this way, the dead center still has its uses and you are out very little. I do not think I know of anyone who has converted and decided they did not like it. (That is a good poll question!)
Look around, learn some, practice turning wood first and then buy the kits. Send me an e-mail and I will send you some PDF articles to look at.
Heck, I have some spare cigar bushings I can send you, might even toss in a couple cigars; I can touch base with that when you e-mail me.
I think you might like this kit for starting out better than the slimline. The hardware is shaped in a way that (IMHO) is much more forgiving than the slimline. In addition, the slimlines always seem to have loose center bands and if the wood is not perfect, you feel it more than the cigar kit.