Weddings do not HAVE to be expensive. The mandatory expenses are the fee for the license, the fee/gift for your officiant, and then if you're inviting guests you need to provide each one of them with a chair, food, and drinks. Absolutely everything else is optional.
Yes, if you want a Saturday evening wedding at a banquet hall with 150 guests and a full bar and a designer gown, then there's really no way to avoid spending thousands of dollars. But it doesn't make your wedding any less of a wedding if you don't do these things. Wedding planning is about PRIORITIES. So decide what your priorities might be - a larger guest list? A designer gown? An elegant dinner? - and then do what it takes to make that happen within your budget.
Keep the guest list as small as you can. That's the best way to save money.
Decide what you need and don't need. You need chairs, food, and drinks - no way around that. But do you "need" a designer gown? Fancy invitations that'll just be thrown in the trash? Monogrammed cocktail napkins? Guests most appreciate the food and drinks - they don't care about decor or details.
DIY isn't always the answer to save money ... sometimes the materials and labor wind up costing you more than it'd cost to just hire a pro. If you want pocketfold invitations, it might cost $200 on a website, but by the time you buy all the craft supplies and DIY and mess up a few, it might cost $300.
And sometimes it's not worth it to DIY a project that's unnecessary in the first place. It might cost $100 to order those monogrammed napkins. It might cost $50 to buy a custom embosser and a pack of napkins and make them yourself. It will cost $0 to skip them entirely. Decide what you NEED, what you really WANT, and what you can go without. Everything can't be a splurge ... pick one or two things to splurge on, and then do without the rest or figure out a way to borrow it (a veil, shoes, a cake cutting set) or skip it (favors, monogrammed napkins, cake topper).
If you have a bridal party, then you need to spend money on flowers and gifts, and if you have a rehearsal then you need to feed them plus their spouses. So consider skipping a bridal party. If you must have one, then consider JUST having a Best Man and Maid of Honor. Let them pick out their own outfits (you can choose the color) and skip a rehearsal, and then get them each a nice gift or gift card.
In most weddings, 50% of the budget goes to the reception - facility rental, food and drinks, cake, tax and gratuity, any other fees, linen rentals, hiring waiters if the place doesn't provide them, etc. So if your overall budget is $3000, then you have $1500 to spend on the reception.
It's up to you how to divide that. If you have 100 guests, then you can spend $15 per person. Remember that that is NOT just food and drinks. So it's more like $7-10pp. If you want 20 guests, then that's $75pp, or in reality around $50-60pp. Again, decide on your priorities, and make sacrifices to make it happen.
If you want to invite 100 people, then you need to sacrifice the elegant evening dinner ... hold the wedding in mid-afternoon, that way your reception isn't during a mealtime and therefore you don't have to serve a full meal. Rent out the church's basement or a VFW hall or firehouse hall. Print "Light refreshments to follow" on your invitations and then serve small sandwiches along with fruit, cheese, and vegetable platters, plus a cake. Or just serve cake, coffee/punch, and fruit platters. Alcohol is not required, but soft drinks must always be available and FREE - ice water, coffee and tea, soda, punch/iced tea/lemonade. You can pick up sandwich platters, appetizer platters, a cake, and beverages at a local supermarket that morning, along with paper plates, napkins, cups, and bagged ice. Hire someone from your church or a couple of neighborhood teenagers to set up, pour drinks and serve cake, and clean up. Make an iPod or laptop playlist and hook it into the hall's speaker system or play it on a boom box, for background noise even if you don't want dancing.
But if you sacrifice the larger wedding and only invite 20 people, then you have more money to play with. You can book a nice restaurant and do a plated, served meal and open bar for around $50pp. The restaurant can play your iPod or a mix CD. You can probably get some nice small flower arrangements from a florist or a supermarket florist.
That leaves $1500 to spend on other stuff:
See if you can find a photographer on Craigslist or from a college with a photography program for $500-700. Your pics probably won't be fantastic, but you'll have something. Politely ask a friend if they can videotape the ceremony for you, if you want a video (we skipped a video and have zero regrets).
You can get a dress through Modcloth.com, JCrew.com, Nordstrom.com, Macys.com, Dillards.com, etc. Look in thrift shops and consignment stores. Look on Craigslist for a local bride selling her dress. Go to a department store and look at evening gowns and prom dresses. Avoid Chinese knockoffs on eBay. David's Bridal and Group USA usually have options for $300 or less. Have a local tailor do the alterations rather than going through a salon (your friend has a point ... David's Bridal/salon alterations can sometimes cost just as much as the dress, if not more).
Borrow a veil from a friend, or look on Etsy.com and eBay for an inexpensive one, or just skip it. Wear shoes you already own - with a long dress, nobody will ever see them, and most brides nowadays do metallic or colorful shoes rather than white ones. Borrow jewelry or get it from a department store or Kohl's.
Get very basic invitations. They just get thrown away, so don't go nuts. Don't forget postage. Heavier invites (with lots of insert cards) cost more to mail, and square invites require extra postage so stick with rectangular.
Skip favors.
Centerpieces can be grocery store flowers in borrowed vases, or candles, or framed photos, or river rocks.
If you aren't religious and don't have a minister, consider paying for a friend to get ordained online and perform your ceremony.
Get basic wedding bands with no stones. You can always upgrade later if you wish. Try bluenile.com or local independent stores. Avoid chain/mall jewelry stores like Zales and Kay - you can do better elsewhere.
Remember that, if any part of your wedding day is outdoors, you need a backup plan for rain, like a rented tent ($$$) or an indoor location on standby (VFW hall, church hall, etc.).