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Originally Posted by Janitor Julius
As lots of people have mentioned, there are countless options on this front. I've found that it all starts with having good sounding gear to record and good speakers to hear your playback accurately. You should be able to craigslist or ebay a pair of monitors pretty cheap. I picked up the m-audio bx5a's at a pawn shop for $100 for the pair and they sound AWESOME! The most important thing to remember about shopping for budget monitors is that they don't have to be super loud, they just have to be well balanced and clear. You can take a cd you're really familiar with to most music stores and side by side pairs of monitors to see which you like best, then go find them elsewhere for cheaper. I have a few interfaces, all m-audio. The a/d converters are really good on all of them and they're all pretty affordable. I also invested in a good mic (sennheiser e935 dynamic cardiod) for the vocals. Next buy may be an sm57 to mic my marshall cab and that's about it as far as gear goes. When it comes to software you can end up spending a lot of money. It's unfortunate that people downloading programs on bit torrent drive the price up for those of us who actually buy the stuff... but you can choose your side of that argument and explore your options at your discretion.
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I would seriously take a look at StealthPedal-it comes with recording software, modeling, great preamps, etc. It is the total package.