At this point in time, I suggest you spend your monthly budget acquiring a quality aged domain or two a month. You have to do your research so you aren't ripped off.

I'd also spend $20 a month on a reseller hosting account and join www.Seedz.net (My site) which is a new hosting exchange club. I'd put each domain on different hosting accounts you trade with other members to start building your own custom network of sites.

Then I'd use the rest of your budget to develop good quality content to use on your network.

By building and using your own private network, you are in control of everything, including quality, relevance, what links go on your homepage, etc. plus the ability to add contextual links whenever and wherever you want.

"Gently" build some decent links to each domain...

You don't need a lot of your own domains for this strategy to work, depending on your keywords. And it doesn't cost a lot of money.