Itinerary for First Time Traveler 2 weeks: Germany Switzerland Austria

Why not spend your time in Munich on arrival, rather than back tracking there after Salzburg? Proceed to Switzerland thru Innsbruck. Zurich is your logical departure city.

Day 2 Arrive Munich - 4 nights
Day 6 To Salzburg - 3 nights
Day 9 To Innsbruck - 1 night
Day 10 To Gimmelwald - 4 nights
Day 14 Depart Zurich

I suggest that you do visit Rothenburg. It is some distance from Munich, but worth the trip. The Zugspitze is great, but doesn't compare to Rothenburg. Also, consider going up the Romantic Road that includes, Augsburg, and the villages of Dinkelsbuehl, Noerdlingen and Donauwoerth, as well as Rothenburg.

Dinkelsbuehl is a medieval city like Rothenburg, but less of a tourist mecca. Donauwoerth is another old city with walls. The walls are built at the edge of a large metorite crater where the old city was built on.

Here are some tours that might help. The one from Munich to Frankfurt or reverse on the Romantic Road is great, but it probably won't work for your plans.

http://www.viator.com/Romantic-Road/d21519-ttd?pref=01&aid=ygemt3348

Sounds like a very reasonable itinerary. Enjoy your planning!

While hostels will help you mind the budget, $6000 sounds a bit light to me for two weeks including airfare. I like to noodle it all out on a spreadsheet, including expected cost of tours, admissions and in the case of the Berner Oberland, the lifts. the Swiss exchange rate is good for Americans right now, but the overall prices are crazy, so prepare yourselves for that. There is a Berner-Oberland Regional Pass that can save you some money if you plan to ride the lifts a lot. Staying in Gimmelwald, you will need the lifts so plan on buying a pass. That way you don't have to forego a hike because the lift price is off-putting. The pass covers you from Bern to the Lauterbrunnen Valley.

djp_Syd: I definitely love the idea of going from Salzburg to Innsbruck. I will have to add that, it makes much more sense.

Laurel: We could easily add $1000 to our budget. And honestly figuring out train prices and pass prices has been the hardest for me.
I don't know if I should buy Eurail passes or individual train tickets or other passes. I've gone back and forth so much on what to do. I have no clue as to what would be cheapest in the long run. I've tried to use Rome2Rio and Goeuro to figure out costs. Any advice would be great.

Rome2 Rio, while a great way to start finding out how to get places, does not always have accurate pricing information.

To find train prices and schedules, go right to the source. For trains that start or end in Germany, that's the Bahn website: http://reiseauskunft.bahn.de/bin/query.exe/en. If you need help using it, here's Rick's tutorial: http://www.ricksteves.com/travel-tips/transportation/trains/online-schedules

For Swiss train prices, use Swiss Rail: http://www.sbb.ch/en/home.html But note that the first price shown (for example, "from 50 CHF") is for people with a half fare card. So click on the Fare/Buy icon, then under Details of the Passenger, you'll see "Reduction." Choose "No Reduction" (you don't have to put in anything else) to see the full regular fare.

For the German portion of your trip, a pass is unlikely to be a good deal. For Switzerland, a Half Fare Card, Swiss Pass, or Berner Oberland Pass may pay. Unfortunately, the only way to find out is to do the math. One shortcut - if the full regular price of all of the trains you are definitely taking in Switzerland adds up to more than 240 CHF, then you cannot lose with the Half Fare Card. As a bonus, you get 50% off of everything that moves in the country - from local bus fares to the Jungfraujoch. As you note, the Jungfraujoch is very expensive, so the Half Fare Card is a great deal if you are sure you are taking it.

Our family did a similar trip a couple of years ago. Here are my thoughts:
$6000 for two should be fine if you are careful with money. About $1000 each for airfare, for hostels figure $40 each per night, eating $25 per day if you buy picnic supplies at stores, train travel will be a few hundred each. In Germany you should look for the regional (Bayern?) train tickets to go to Salzburg and Neuschwanstein. We stayed at the Yoho hostel in Salzburg and could walk to the sights. We also took the night train from Salzburg to Zurich, thus saving a night of hostels.

If you like the "Sound of Music" movie, seriously consider the Panorama Sound of Music bus tour in Salzburg. Also consider visiting the "Eisreisenwelt" nearby (Google it!). It is an ice cave in the mountains near Werfen south of Salzburg. Panorama also does that tour. The Salzburg train station also sells the "salt ticket" that pays for a short train ride and bus to a nearby salt mine tour.

In Salzburg there is a local bus to Berchtesgaden. It leaves across the street from the train station (ask!), perhaps hourly. If you take it early enough you'd have time to visit Hitler's Hideout and Konigsee in Berchtesgaden.

You mentioned exploring the town of Gimmelwald. Ummm...that will take you 10 min. It is small! I like Gimmelwald, but I don't find it good for a base of explorations. No trail really starts from there. Instead, consider Murren, Lauterbrunnen, Wengen, or Grindelwald. If you like exploring the trails with great views, here are the best 3:
Mannlichen (Google image it!) to Kleine Scheidegg is the best and save it for the clearest day, because it has views that go for miles all around. The trail is level and takes 1.5 hours, not including trains and lifts there and back.
Grutschalp (above Lauterbrunnen) to Murren, roughly near the train tracks. About 2 hours 1 way, gentle rolling trail.
First (a cable-car station above Grindelwald) to Bachalpsee (Google image it!). About 45 min there and 45 min back, on gently rolling hills with mountain views. if you have time after this trip, from Grindelwald take the lift to Pfingstegg. There you will find the Pfingstegg Rodelbahn which is great fun. (Google image it!)
Also, don't miss Trummelbach Falls (Google image!) which is a 45 min walk south of Lauterbrunnen, or take the Postbus there.