Desktop computers are becoming more affordable each year, and today, you can get a machine that's capable of surfing the web, word processing and managing multimedia for just a few hundred dollars. However, there are some bare minimum hardware and software needs that shouldn't be passed up for the sake of saving a dollar. Read on to learn how to choose a budget desktop computer that meets your needs.

Hardware
Intel processors are the gold standard of CPUs, though you can save a few dollars by choosing a trusted generic brand, such as AMD. Today's budget desktops can sport dual-core processors while remaining affordable. If the price is right, spring for a quad-core processor for a significant boost in performance—but for basic word processing, web surfing and multimedia playback, dual-core does the job.
In terms of RAM, get at least 1 GB. Note that you can always buy RAM upgrades separately - it'll usually be cheaper, too. For dual-core processors, you'll get more performance from two matching RAM units (i.e. two 512 MB units or two 1 GB units) instead of a single unit of equivalent capacity (i.e. a single 1 GB unit or a single 2 GB unit). Likewise, a quad-core processor gets more oomph with a set of four matching RAM units.
In terms of hard drive space, 80 GB will suffice for documents and a few photos saved from the web or email. But bumping up to 120 GB to 250 GB will give you more space for music, videos and pictures without breaking the bank.
Lastly, make sure that your computer comes with a monitor. If it doesn't, you'll have to factor that into the price by adding $50 to $150 to the total cost of the system.

Operating System and Software
Depending on your needs, software can end up costing as much or more than the machine itself. In terms of operating systems, the two main contenders are Microsoft Windows and Apple Mac OS. You can save significantly by choosing a computer that comes bundled with an operating system—but to get your money's worth, make sure you get a machine with the latest version. (For example, some refurbished or discount desktops come with Windows XP or Windows Vista, rather than Windows 7.)
In terms of cost, a computer running Mac OS will cost you more simply because Apple's operating system will only run on Apple computers, which are significantly more expensive. Microsoft Windows, on the other hand, will run on any machine (even a Mac).
If you'll be using your computer in an office setting or working with clients, classmates or colleagues that rely on Microsoft Office products (such as Outlook, Word, PowerPoint and Excel), your best choice is a computer that comes pre-loaded with Microsoft Windows. Although Macs can handle Microsoft documents, you'll have less connectivity, networking, file sharing and productivity headaches if everyone is on the same platform.

Macintoshes are generally regarded as better for multimedia applications. Mac OS comes preloaded with web, music and video editing software (such as iWeb, Garageband and iMovie), which makes it particularly well-suited to arts students, designers and other creative professionals and hobbyists. Macintoshes are also less susceptible to viruses and malware.

For the truly frugal, Linux provides a third alternative. In terms of cost, a Linux computer wins hands down - Linux is free. Linux-based operating systems can handle documents, spreadsheets and multimedia through open source (free) programs such as Open Office.

Refurbished, Pre-Owned and Recertified
Buying a used computer is a bit like buying a new car. You may save in the short term, but the longevity of your computer may be compromised. If you choose to buy a pre-owned computer, go for one that has been refurbished or recertified. Also, ensure that it meets the criteria delineated above. While used computers are often a good deal, pay close regard to the trade off you're receiving. It doesn't make sense to save 10% on a computer that's only half as good as a new desktop.

While the tips above should be handy when vetting budget computers, the best advice you can take is to shop around. Carefully note the specs for each machine and do some rigorous apples-to-apples comparison shopping. This is your best bet for avoiding overpaying for an underpowered computer.