I get unmanaged dedicated servers from
www.ev1servers.net for as low as $129/mo (Once $99/mo). With their servers and reseller software (Cpanel, Plesk, or Ensim) You can host friends, family, or others to make up for your cost and eventually have all of your sites hosted "free".
The only thing is the reason these servers are so cheap is they are, again, unmanaged. This means you will likely spend a lot of time in their support forum figuring out how to configure your server to get it started. This means things like setting your server up with "nameservers", and reverse DNS entries, or even adding more IPs which can be sent from to prevent mass mail delivery issues. I could be coerced into configuring your server for around $250.
Regards