Accommodation accounts for a large portion of your allotted travel money. As any experienced vacationer will tell you, budget travel depends to a great extent on finding somewhere affordable to stay.
To begin with, it's important that you begin planning your vacation well in advance. Spur of the moment travel is invariably expensive, as attempting to secure rooms at the last minute renders more likely the possibility that affordable hotels will be full.
This will leave you with a choice of accommodation that is cheap but too basic, or too lavish and out of your price range. Most hotels will take bookings up to a year in advance and as a budget traveller you should take advantage of this fact.
In addition, you might want to browse the internet looking for package deals. Your local travel agent should be able to tell you about these special offers which include both accommodation and flight prices in one lump sum. More often than not, they work out to be cheaper than the more conventional, separate alternatives and save you organisational hassle as well.
In short, the cost-effectiveness of your vacation depends to a great extent on the accommodation you secure. In order to make sure you don't find yourself in a situation where all reasonable hotels are full, book your rooms well in advance.

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