First time I was in your position I bought an older Yamaha 400cc motorcycle for $700. Insurance was $25 a month and gas was $100 a month (compared with my $350-$400 regular gas bill) It was like I was making money by owning a motorcycle :)
Second time I bought a used Hyundai accent for $600 and drove it for a year then sold it for $500. Insurance was $115 and gas about $250 a month. Similar to the motorcycle buying this car actually saved me money over having just 1 vehicle.
My advice if you buy a cheaper used car test drive it for at least 1/2 hour on the highway, over speed bumps, tight turns etc. Check all fluids.
If you can invest in a cheaper OBD2 reader as well ($15) as you never know if someone has turned off check engine light or even pulled the bulb