Long story: I started really small. I paid around $20/month for a shared hosting when the site is really small (separate app server and db server) and not a lot of contents. my amazon S3 bill is even smaller. Later on when the site outgrows the shared hosting, I used EC2 to get two small isntances (for both app and DB server). Bottom line is the $$ i get from banner is able to pay for the bandwith and hosting. The only extra I pay for is $150 a month for google adwords to drive traffic ($5 a day budget).

Short version: Adwords for $150 a month (I've been paying for this for a year)