When I started podcasting in 2012, my co-host and I just used the microphone on our Apple earbuds. I was recording in my basement at the time.
Since then, I've upgraded my equipment and my studio setup, but it's still not super crazy (or expensive).
I help run a coworking office in Vernon. In addition to the open-office, we have a private studio space that can be booked out on an hourly basis. This is where I do most of my recording.
I insulate the space with a mix of sound panels, egg crate foam, and couch cushions. Honestly, I feel like the couch cushions are best for sound insulation. We also bought the London-8 sound panel kit.