You will need:

a microphone (more are preferable, but let's start there)

an interface to get your mics/lines into the computer, firewire connect
(Presonus, MOTU, RME, Digidesign all make these)

headphones/monitors to hear the tracking/mixing

a preamp for the mic or line if your interface doesn't have them included

I think we need some more basic information to better answer your question:

1. What style(s) of music will you be recording.
2. Will you just be recording yourself or other people as well. at the same time?
3. What kind of environment will you be recording in (i.e. Room)

All you need is:

$1000 for a single good microphone (Neumann, AKG).

$1000 for a single good preamp (API, Neve).

Take these two items and call me in the morning.
Ms. Remy Ann David

More info

I record pop and R&B, and will eventually branch out. I will mostly be recording myself. I want to put my music out there especially on the internet as I would like critiques and feedback. I'm using my room which isn't acoustically treated, but it's the best I can do for now. I want to make a demo eventually, which I plan on doing in a professional studio, but I kind of want to have it all mapped out before I go so time and money isn't wasted.
As far as equipment goes, I'm looking at MOTU for my interface, I'm still researching, but now that I have an idea of what to get I can concentrate my research. My concern is that I want all my equipment to work well together, be compatible. Any advice on this, as this will narrow my search even further.
I thank you all for responding. This site is a gem and a bottomless well of information.

If you don't have any outboard gear like pre amps or compressors, then pretty much everything is compatible.

What instruments are you recording? How big is your room? Carpet or hard wood? If you clap to you hear a metallic ring? Answers to these will help will help with microphone selection.

I'm just recording my keyboard, an acoustic guitarr, and vocals if possible. I have to measure the room, but it's carpeted. And yeah I do hear a metallic sound when I clap.

An SM57 is a shure bet for the vocals in that situation. I'm very tempted to suggest a budget SDC, but it's probably better to stick with just the 57. If you are just recording yourself then get a two channel interface like an M-Audio Fast track. If you want to do drums or a small band get something like the Tascam US1641.

Treat your primary reflective surfaces and corner if you can.