Japan travel on a budget?

Here are some tips from my experience.

You can try staying at capsule hotels and small business hotels. $30 is could be a bit short, especially with the current exchange rate. I would actually budget $50 a night.
A few years ago I stayed at a capsule hotel. The basics are all there common bath, showers and a place to sleep. Capsule hotels are usually found near major stations.
You can also walk into a travel agency and ask for a business hotel and specify the rate you would like to pay. This may run you about $120 per person.

Food
Local knowledge and the ability to read Japanese can save you a lot of money. To get to the point, you can find bargains at grocery stores in the deli sections. Another good way to save money is to live off of instant noodles and other foods from the convenience stores.

Transportation
There is something to be said about the JR Rail pass, one trip one the bullet train and it pays for itself. But if that does not work for you here is an alternative. You can take the local trains over a long distance, but that requires transferring and understanding where the train terminates. If you can figure that out you can save about 40% of the fee.
Another option is to take a red eye bus between large cities. This will cost you about $50.

Thirty bucks you could probably do, but not twenty. You can stay at youth hostels even if you are no longer a youth. Saunas are a good place to stay as well. They all have a "rest room" where you can sleep. If time isn't an issue then the Seishun juhachi kippu is the way to go! The long distance ferries are a good deal as well if you have time. If you go tatami class it is cheap, and you are getting your accommodations and transport at the same time. If you eat at Yoshinoya etc. it is cheaper than Mac or KFC and it is decent food. If you go to the department store basements after 18:00 or so you can get a bento or whatever at a discount price. If you want cup noodles, etc. then every convenience store has hot water and a microwave you can use.

http://www.japan-guide.com/e/e2362.html

A youth hostel? What youth hostels... And what's the point of going if you're not going to travel? To enjoy Japan you should travel in Japan. You stay in a tourist area for a couple of weeks and you're going to waste your money. I suggest you get a flight to northern Japan, spend a couple of weeks traveling south through Japan, and fly out through the southern airport in Fukuoka. edit: I forgot to answer your question. It's not as expensive as you think. If you don't stay in Tokyo you'll find things to be of similar expense to home. Think of Tokyo like NYC... ever go to a popular bar or restaurant in NYC? $10 beers, yet the same beer is $3 at your local pub. As for your budget, $1200 a week should keep you very comfortable. My budget for a two week trip would be about $700.

This is one of cases.

They have very small hotel rooms you can stay in for that price... First try and see if you can work on a normal room for about that price, and if not, then go for one of the smaller things. I would recommend checking out the website BookMe dot com. You can compare ALL the reputable travel sites, and save money. Good luck!

Youth hostels or business hotels close to major train stations. US$20 might be a bit too unreasonable, and if there is such places, you want to be careful, too.

In terms of transportation, get the Japan Rail Pass, as you can use it on the metro, too.

Instead of joining tours, why not design your own. Just get a Lonely Planet travel book and make your own itinerary. With the metro/rail system in Japan, you can easily get from one sight to another easily.

Another thing you can consider is taking the late trains for long distance traveling, that way you can sleep on the train and you can use those "day lockers" at most stations to store your backpack while you explore during the day.

Where in Japan are you planning to visit?