well you want to start with an audio interface. although you only want to record two instruments at any one time you listed drums as one of the instruments. i'm not sure how good you want the quality to be, but i'd say you'd at least need a 4 in audio interface (two overheads, bass and snare) although you could get away with 2, but that wouldn't be the best quality at all. im talking sketchy demo style at the best, which could work depending on the type of music.
so i'll presume you'll be using a 4 in audio interface, you're gonna need 4 mics. i'd suggest 2 large diaphragm condenser mics, which can be used for the majority of things such as the drum overheads, trumpets, sax, acoustic guitar and vocals. then a sm57 style mic for the snare and would also work as a vocal alternative and electric guitar (you said guitar, not sure if that meant electric or not) and then you'll need a dedicated kick drum mic. obviously if these are all being used at the same time you'll need mic stands for them all.
next thing to think about is monitoring headphones. these aren't entirely essential, you could just use earphones for this but it's not recommend. you could also use some headphones you already have, just make sure they're closed.
next is monitors. a fairly good consumer pair will cost you around £300 in the UK, not sure about the states. it's worth investing in a really good pair because theres nothing worse than listening to your recordings on rubbish speakers.
next i'd think about maybe getting some sort of external hard drive to record onto. depending on what system you're running will determine if you can/want to use firewire or usb. bear in mind if you decide to cut back the costs abit and go for a 2 in audio interface i wouldn't say an external hard drive is essential.
let me know if a 4 in audio interface sounds good or not, and then i can try and recommend you some gear for everything within your budget.
