I was in your situation and after playing arond with some light bulbs and a borrowed manual flash I've discovered that (unsurprisingly) a flash is better.
You can get a YN480 flash on eBay for arond $40 - it's a manual flash, that means you have to put the camera on manual mode and adjust exposure and flash power manually (but it's easier than it sounds, I can get the correct settings with just 2-3 test shots, and I'm not an expert).
Or, you can do what I did and get the YN485, that's a TTL flash, that's means you get the correct flash power automatically on every shot, but it's just a little bit above your budget.
You point the flash at the cieling or a nearby wall and use it as a reflector to get nice soft light.
You can easily make a DIY reflector from stuff you already have or from really cheap items you can pick up at and hardware store, so I wouldn't buy it unless you have the money to pay for the conviniance of a folding reflector (the same goes for softboxes and most other light modifiers).