Rutland is cheap, has hiking and mountain biking nearby. Pine Hill Park for some good XC trails outside of town, Killington for lift-serviced downhill. The Long Trail and Appalachian Trail run just outside of town (and split apart outside of Mendon).

With your budget, camping will definitely be the most affordable option. If you have a car / van to camp out of it’d make your quality of life better. You can dispersed camp in a few areas but there are rules about how close you can camp to trails, roads and sources of water — maps of where to camp can be found online.

If you’re primarily interested in hiking, I’d do a stretch of the AT. There’s tons of free camping options, and plenty of places specifically catered to AT hikers (like a hostel in downtown Rutland that’s free for hikers — though it’s owned by a literal cult, so there are some mixed opinions about it).