Part of my bike strategy is that I have a bike dedicated to being utilitarian and less attractive to thieves. Having something like that makes it easy to keep my "fun" bikes as fast and impractical and flashy as I want. There are a bunch of solutions to the utility part but many are not at all secure and don't really work for me and how I like to be able to ride my utility bike.
I got the bike for $95, used. The rack was $10, also used. The wire baskets were $25 each. The fenders came off my previous attempt at a commute bike, as did the chain, and the saddle is from my mountain bike after I put on something more appropriate to the way I use it. I also had to replace the left shift lever, and that was again removed from my previous commute attempt. If I didn't have the spare around, though, I could have lived with the one that was on it. I have a whole little stoke blog from when I first got the bike.
Granted I already like bikes and I'm fairly mechanically inclined. But every city I've lived in has a couple reputable shops carrying used bikes, as well as Craig's List, pawn shops and thrift stores. The budget for this thing is about a day's pay, seven tanks of gas or three bus passes.