Bedding

If you're handy with a sewing machine, use worn sheets to make baby sheets, using the less worn part.  They will be nice and soft!

If you sew, make your own baby accessories.  Bed ruffles, diaper holders, and curtains often come in fabric-panel form at the fabric store, making sewing a breeze. You just have to be able to sew a straight seam and put on the seam binding.  If you're not crafty, check for used bedding on eBay for a fraction of the price.

1000 Best Baby Bargains