Hi Ross,
It is possible to buy a slightly larger lathe and mount a vertical slide to do your milling. Many model engineers in the past (and in the present) produce excellent work in this way. If you need to move on, such vertical slides are very saleable and you could move up to a milling machine as your budget improves.
Much milling work can also be done in the lathe with the work mounted on the cross slide – must have a tee slotted cross slide for this.
That would give you a budget for a collet set and milling cutters (don't hold them in a normal chuck, they will move) as well as a range of other kit you need such as lathe tooling tailstock chucks and taps for the thread (you will break these) etc. By the way, lathe is not a verb, it is normal to refer to the process as turning. One uses a lathe for turning.
Edited By Terryd on 11/10/2012 14:39:08
Edited By Terryd on 11/10/2012 14:39:50