Caulk is the most overlooked and inexpensive tool I know of. If you have an old house but the wood is good (not rotten), you will be shocked at what a few tubes of paintable caulk can do. Fill any cracks along baseboards, between trim, on edges of cabinets, and in corners. If you're a DIYer installing built-ins, trim, or cabinetry, you'll need it to finish your project before painting. Below is a cabinet corner before and after caulk.
At around $30 for a bucket of good quality paint, you can completely transform and renew a room. Here's an example of a bathroom completely transformed with paint (and some peel-n-stick floor tiles and curtains).
Here's another example of how enormous an effect paint can have on a space. At each step in the process of renovating this kitchen, paint played a big part. I loved that blue...I loved it with the warmth of the wood cabinets.
Fabric adds color, pattern, and texture. It softens and warms a place. One gal who knows this well is The Nester, a.k.a. Myquillyn. Please take a look at her site (click on either photo below too) - it is a wealth of smart decorating knowledge.
Can you believe that's a drafty addition to their barn? Look at that soft, inviting bed and the sheep skin rug.
Can you believe that's inside the barn?? She achieved this cozy look with fabric - curtains, upholstered furniture, bedding, rug, pouf, and pillows.
Fabric can be added as slipcovers, rugs (they're textiles too!), simple drapes, bedding pillows, to the back of bookshelves, to the walls themselves...there are so many ways to add fabric. Layer rugs if you have multiples, like jute under woven, or cow hide over wool (if you are lucky enough to have a cow hide rug). Add a fake fur throw or a sheep skin. Layer bedding with a bedskirt, coverlet or quilt, throw or blanket, and coordinating sheets. Make your bed beckon to you.
You don't have to overpay to make your space cozy. Some Walmart stores still sell fabric by the yard for around $3, and fabric stores have clearance racks. There's fabric.com and overstock.com. Yard sale pillows can be recovered, and flat sheets or drop cloths can become curtains. Remember to hang your curtain rods (including shower rods) as close to the ceiling as you can, and as wide as you can, so when they are open you can allow ALL the light in through the window and not cover any of it except the window's trim on the side. This lengthens the space and makes the window seem bigger.
To make simple curtain panels (and some links to tutorials)...
With a flat sheet: snip the seams on the left and right of the thickest hem (usually goes at the top of the bed, where your face and hands are), leaving a tunnel to slide a curtain rod through. Or use clip-on rings. The Frugal Homemaker
With fabric by the yard: fold the raw edge twice and iron. Use fusible hem tape and an iron, a hot glue gun, or a sewing machine to secure. Fold one side's hem thick enough to fit a curtain rod through or use clip-on rings. Two Twenty One
With a drop cloth: choose a size appropriate for your window, and use clip-on rings. Alternately, cut a larger drop cloth in half to save money, and finish the raw edge with a seam or hot glue or fusible hem tape. Better Homes and Gardens (several tutorials on this one)