I think you should bring your old Sears bike into the local bike shop and have it tuned up. It would probably be $50 well spent, and then you have really bonded with it.

It may be old, but that doesn't make it bad. They were heavier then, but one could also buy a decent new entry level bike without getting junk quality.

Other options:
- look at garage sale listing in your paper, and hit the ones that say they have bikes.
- Look for a bike co-op in your area
- Look on Craigslist and at least email/call guys with bikes that look like they might be OK. These guys are local, so it doesn't take much to go and look at them in person, and you could probably get a lot for $250.

I sold a nice bike on craigslist last week for $50. You just have to be watchful and be ready to pounce on the right one.