Please Advise me on Building a System on a Budget

Hello everyone,

I am an aspiring audiophile who loves music but I have never had the money to buy any real nice equipment. I am looking to build a relatively nice system for the first time and I am on a budget. I am looking to spend only around $2000 on everything. I am looking to get everything used and I am willing to hunt on ebay and craigslist for bargains. I want to stretch this $2000 as far as I can. I have a few questions that I hope some of you experts could help me with.

Ideally, I need a pair of speakers, a preamp, an amp, a record player and some type of digital source like a cd player (or SACD player). I know that is an aweful lot to ask for on a $2000 budget but tell me what you think I could do.

One question I have been wondering is if it really makes sense in 2011 to spend big money on a cd player or SACD player. I don't quite understand people who are spending a thousand dollars on a top of the line NAD player or other unit. Wouldn't it make more sense to have a hard drive based unit or computer playing lossless audio files? Wouldn't that be able to produce the same quality audio but be more convenient?

My initial thoughts would be that I should have a PC with a solid DAC as my digital source (or hard drive based player) and then get a good record player. Does this sound reasonable? Or is there some reason why playing old fashioned CDs through a NAD or other device would sound superior? Also, would you recommend a SACD player? Of course, there are plenty of high resolution FLAC files that I could conceivably play from a hard drive unit as well.
Please advise on this.

What I was thinking of as far as budgeting was concerned is: Spend about $700-$800 on the best used speakers I can find. Spend about the same on the best Pre-amp/Power amp combination I can find. And spend the rest towards the rest, particularly the digital and vinyl sources.

The $2000 is not a hard and fast budget but I seriously do not have a lot of money and I want to get the best audio I can for a reasonable amount. I would rather spend more on the speakers and amps and maybe wait on a record player.

What can you suggest? Thanks. I look forward to hearing your suggestions.
I wanted to ask about Magnepan speakers. Jazzerdave suggested I look at the MMG's. I have long heard about the raves that audiophiles have heaped on the 1.7 and 3.7. I have also heard that they represent some of the best values in audio. I haven't heard too much about their lower priced stuff though.

I know I cannot stretch my money to buy the 1.7's but I am open to their cheaper models. Could someone tell me how their lower priced speakers sound in comparison to other speakers of the same price? Is there certain types of music that are better represented with the maggies that others?

Would they work well with vinyl? Are they lacking in bass? I would like to go for Magenpan's but I need to know a little more about them first.

What types of amps would be advisable to use?

I am looking for a tube based integrated amp. Could you give me any more suggestions?

Thanks a lot.
As far as Magnepan goes, yes I would say they're lacking in bass. Even the 3.7's could use a subwoofer. Also you need a really fast sub to integrate it well. The MMG's need a subwoofer for the best experience; however, they're definitely a good introduction to panel speakers. The clarity and imaging will probably be better than anything you can find in a similar price range. I'd recommend solid state power amps and a tube preamp, but there are plenty of options. The TAD Hibachi monoblocks (solid state ~200W/ch into 4 ohms) would work well, sound more "tube-like" than solid state, and you could probably pick up a set on the cheap using up less than 20% of your budget. Essentially the MMG's are there to get you hooked on the Magnepan sound; they want you to start there and eventually decide to move your way up the chain. It's always a good idea to get a feel for the Magnepan sound for yourself, so search around for some reviews and try to find a nearby dealer or owner to audition something in the Magnepan line. However, if you can't find the opportunity to do that, I do suggest giving the MMG home audition a try. You could use them alone for a while, then eventually add a sub, and then after a few years move up to the 1.7's. Or if you don't like them, you just send them back and search for some more traditional speakers.
You've determined your budget, good so far. Now I'd suggest determining what you think you'll need, then what might work in your room, then decide on your speakers, before committing to specific amplification choices.
I almost forgot. Earlier Ivan had mentioned the Peachtree Audio iDac. It's an excellent product, but I'd also suggest trying out the iDecco. The DAC in the iDecco isn't quite as awesome, but it's still very good, the preamp is pretty good too, there's a damn fine headphone amp, and the 30wpc amp is pretty good for the money. You can get the iDecco for a little over $800. I think the DAC alone is worth at least that much. I think you'd have to spend about $500 to beat the headphone amp, and around $1000 to equal or best the preamp. You could probably equal the power amp easily enough, but it's not bad. The combination of the iPod doc with .flac files (of well recorded material) can beat the pants off of some CD players that would consume your entire budget. The iDecco was the 2011 Stereophile budget component of the year, and it was well deserved.

If you got the iDecco, you could have several options You would have a little under $1200 left in your budget (if you bought it new-someone's selling one used here for $680). Here's some build's for you:

System 1:
iDecco = $819 (new)
MMG = $599 (new)
TAD Hibachi monoblocks ~ $350 (used)
Denon 2200 ~100 (used)
speaker cable and interconnects from Blue Jeans cable ~$130
Total : $1958

System 2:
iDecco = 819 (new)
Usher S-520 = 450 (new)
Denon 3910 ~250 (used)
Blue Jeans Cable ~ 100
Total : $1,650

You could easily shave a few hundred buck off the first system by getting everything used or completely forgoing the multi-format disc player. Or, if you want to use the USB input from your computer intead of an iPod, you can find the plain Decco used for under $500.

I actually used the second system in my bedroom for a while and thought it sounded great. The Ushers are a small bookshelf monitor, but they have plenty of punch for their size. The only reason I don't have this system set up right now is because I moved my iDecco into another room with a bigger setup. You could start with just the Peachtree and some bookshelf speakers and then eventually add a better, separate power amp, get some full-range floor-standers, then use the Ushers (or other affordable bookshelves) to start a decent little bedroom system.

I'd also give another heavy recommendation to Vandersteen speakers. I've never owned them myself, but I have a good friend who had the 2CE's and just upgraded to the 3A sigs. They sound great. The 3A's are more than your budget allows, but I know he picked up his first set of 2CE's for under $400 with the stands. If you look around, you can find some great deals out there.