I used to think of rugs as one of those big ticket items that I wouldn't be able to afford until the kids went off to college...which makes no sense, cause that's when you're really broke, right? In the last couple of years I've started to change how I think about where and how to buy rugs and quickly realized that nice rugs aren't out of the question for a small budget.
These are two rugs I've bought in the last year:
This is a nice quality, hand-knotted wool rug that I purchased for $100. It measures 7'x4.5' and lies in front of our bedroom seating area. I attended a storage space sale that was advertised on craigslist. A woman in her sixties was looking to clear out her many purchases from 20 years of travel and residence in Europe and the Middle East. She had stored her excess treasures at a U-Haul facility and simply held a sale right out of the storage unit. Read the details of garage sale advertisements! You won't stumble upon the "jack-pot" every weekend but if you look consistently, a good sale will eventually come your way.
Last summer I discovered two great furniture consignment stores in our city. I recently purchased this rug for $65, it measures 3.5'x6'. Many design blogs and shelter magazines had been including beautiful, very worn, antique rugs in their spreads. I commonly see similar rugs in antique stores for $300-$600 so I was pleasantly surprised when I confirmed the price. Both furniture consignment stores in our area also carry a wide selection of rugs and small decor accessories and a handful of quality antiques. Check out the stores in your area! Go with an open mind and always try to picture the item in another setting. It's common for consignment stores to allow you to try the item in your home before committing to purchase.
If I was educated in interior design I'd make some insightful comments about rugs anchoring the room, setting the tone, blah, blah...but since I'm not I'll leave it to the awesome design blogs out there:
Little Green Notebook
Pure Style Home (really excellent post about her design process)
Urban Grace (she is shopping for rugs I can't afford, but good post anyway :))