Good files, a drill and a hack saw is a start, but i was in the same boat a few months ago and just said F it and built a grinder and bought a good porta band saw. you will want a belt grinder and bandsaw sooner or later i promise once your hands and joints and stuff get sore from filing and using a manual hack saw! As far as cheap materials go for practicing, just get some mild steel scraps and use cheap wood like oak from a pallet or something. The problem with that is if you wind up with something that turns out pretty good you will still have a sucky knife that wont stay sharp. I just got some 0-1 and went for it and wound up with some decent knives that will actually hold an edge, i sent them out for heat treatment so i wouldnt screw em up. I gave away my first batch of knives(they make wonderful gifts for family & friends btw) and just consider them practice until I get to where i want my stuff to be. BTW, keep your very first one.
heres a good start once ya get into it:
get some 1080 steel
a 2x72 grinder with some means of speed control
good standard files, like nicholson
some swiss style files and a small chainsaw file
A s load of good sand paper(do NOT buy harbor fright sandpaper)
a drill press
bandsaw
standard vice
knife vice(like the one below)
read a bunch of threads here and google
Build one of these
I would have made one of these knife vices early on if i knew how handy they are
file guides with carbide faces are nice to have too:
BTW these are pretty cheap alternatives, AND THEY STILL WERENT CHEAP. expect to spend $500+ and invest a bunch of hours building going this route.
Some dudes use the crafstman 2x42 or even cheaper the harbor fright belt sanders....anything beats manual grinding and cutting IMO.