Audacity, your computer and a computer mic. This costs next to nothing if you already have the computer.
https://audacity.sourceforge.net/Next up in price, you could probably get one of those USB condenser mics. I haven't tried them, so can't tell you any details.
Another step up would be a portable recorder such as the Edirol R-09 or Zoom H2 or H4n.
Step up again would be computer interface (a dedicated USB or Firewire device with preamps), plus two condenser mics, or a stereo condenser.
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I have the interface and am quite happy with my decision to save up some money to invest in it. The great thing about this option is that you can upgrade components individually as you have more finances. It's like an SLR camera.
That said, I'm looking into the Zoom H4n or another portable recorder for occasions when I would rather not lug so much equipment around to get a recording done.