If you want to go to a cheaper area, try eastern Europe. If you want a lot of old and unique places to see, go to Italy, especially south of Rome is cheaper than north of Rome, eventhough places north of Rome like Florence, Venice, Milan are very interesting to see. For hostel, use key word search and google. You can get the locations, price, reviews and comments etc. Very important, try to stay near to the main train station as they are usually at the center of most of the attractions. It will save you time and money. For transportation, use the Eurorail train pass. You should be able to get all your information on the internet. For guidebook, Rick Steve's European guidebooks are very practical, easy to following and gives you a lot good tips.