Same here, and I think it was the right way to go even though I ended up replacing quite a few items over the years. But when I did replace them I had a much better idea of what I really wanted than I would have had originally.

First tent was a $15 A-frame from a big box discount store. It held up fine on many bike tours and backpacking trips, but I eventually replaced it with a better tent that didn't flap as much in the wind and didn't fall over if another camper tripped over a guyline - gave it to a friend for his kids to use for backyard 'camping'. First sleeping bags we bought were $20 each from K-Mart. They held up fine too but were bulky and heavy. Later got a down bag that weighs less than 2 lbs. and compresses very small. Am still using cheap panniers. Current set is Nashbar's 'Waterproof' model - they were on sale recently for $30/pair and have held up fine for several bike tours (also still have my original set of panniers to lend to friends). And I've never spent more than $20 for a bike rack, nor have I had any issues with them when touring.

So even buying new stuff you should be able to get by for around $100 - less if you're willing to check out used items. But you might want to spend more on items where you have a good idea about features that you want to have.