Well, I live in Europe (UK) - but we go frequently to Spain. Food there is cheap, and if you go to Granada you don't need to hire a car (great transport), there's the Alhambra, open-top buses, and if you buy a drink at a bar (very cheap) you get free tapas (only free in Granada - nowhere else in Spain that I know of). I know of a good hotel that's right in the city centre which we stay at and they do buffet-style lunch for just 8 Euros. Sorry, can't recommend anywhere else much (UK costs a fortune!! we actually find it cheaper to go to Spain).