On the sewing--don't knock older machines! As a PP said, you mostly use straight or zigzag stitch--even a 60yo machine will have these. While newer machines have fancy features and might be easier to thread, they also tend to be cheaper quality. You might have luck finding a good, basic machine at Goodwill--you could always upgrade later if you get more serious. My parents gave me a refurbished machine from the 50's when I was a teen--it lasted until about 15 years ago. Then DH got me a good one on sale at Sears, that had been returned (so the box had been opened--additional discount).
Now, my DD14 has my MIL's old machine. Again, not fancy, not pretty, probably 50 years old, but a good starter machine--DD can't break it! And it made MIL feel good, that it was getting some use.
As to cheap fabrics--good luck! Shop sales and the remnant bins. If you're just learning, stick with simple fabrics--fleece is very forgiving. It doesn't fray. Even DS11 can make his own fleece sleep pants. Flannel and other cotton-rich fabrics are also great for learning. Move on to fancier stuff once you gain confidence.
I'm a huge crafter, and luckily our current home has room for me to have a large craft room--surprisingly, everyone seems to love having this space, because they know they can find glue or tape or whatever they might need. I make elaborate Christmas ornaments--the stuff for these can get pricey--and basically anything. A few other projects in the works right now are a weather scarf for my DD22, coasters for DD22, and a crocheting project. I'm a big fan of "found art", which helps to keep the cost down. For example, the coasters are made from a map of Venice from our travels this summer--traveling is NOT a cheap hobby! But I saved a bunch of brochures, maps, ticket stubs, fancy paper bags, etc., and have been using the fancy Italian stuff in my crafts.
