If an old friend invites you to visit them in their new home town, GO!
The biggest part of a vacation budget is lodging...nothing else comes close. If you can arrange accomodations with friends, you can most likely BETTER afford the other elements that make up a vacation. There is no better way to experience a new place than to have 'one of the natives' show you around, as you will hit the tourist highlights, plus be exposed to the tiny local treasures (small but outstanding restuarants, wonderful shopping venues off of the beaten path) that only the natives know!
Of course, be a good and gracious house guest, and you may be invited to return. (Also, be prepared to offer your home for their next vacation.) This travel plan can work for singles and families; all you need is good planning, and some willingness to go with the flow. Personally, I have stayed with friends in metro-areas like LA & New Orleans, and smaller cities, Hampton Roads and Virginia Beach. It's good to have friends, and the money saved on ONE trip is $$ you can spend to trade up to bigger/better accomodations the next time you are checking out "Trip Advisor" for a great deal on a hotel or resort!