Budget for a 3-week trip to Spain and Portugal.

A lot depends on how much you are willing to economize and what your expectations are as to the quality of lodging and dining. Spain and Portugal are not quite as expensive as countries such as Germany and France, so I think $200 a day could work. But remember, you will be visiting in the high tourist season. The weather will be quite warm (probably mostly in the upper 80's or low 90's) and hotel prices at their highest. I would allow at least $100 a night for hotel double rooms and the other $100 for food for two, with expenses such as local transportation, entertainment, etc. not included.

There are, of course, ways to cut expenses by doing thing such as not eating lunch in a restaurant, and looking for hostel/B&B sort accommodations that are cheaper than hotels. For a comfortable trip, however, I kind of think $300 a day at that time of the year would be more realistic as an overall figure.

Without more details, $200 ($145 Euro) could be very tight given that 3 star hotels will run in the range of 100E/night or more that time of year. Not much allowance for travel costs, admission costs, and meals. It will be hot and could be very hot.

One way to cut expenses is to stay at "hostals," two-star hotels, usually family-run, that are pretty common across Spain. Quality varies, as it does with all hotels, but all I have stayed in have provided comfortable, basic accommodations. For example, a couple of Hostals in downtown Madrid I have used charge 53 euro/night for a double room...that's their rate all year. You can find them at any of the hotel or hostel booking websites....look for the key word "Hostal" in the title. The big question at this date will be availability.
Other ways to save money are to use the extensive inter-city bus services instead of the train (usually much cheaper), find the local grocery shops and do a lot of "al fresco" lunches (better for you, anyway ;)) and limit your admissions to sites you REALLY want to see.
May I offer some comments on itineraries?
Rick can do such a heavy itinerary in 22 days because he and his staff are extremely well organized. You will never get lost, you will always arrive on time for presentation, tickets for events will always be there, chartered buses will be used to take shortcuts if necessary....in other words, it is very difficult for a private individual to follow a similar itinerary without a lot of detailed planning, and a fair bit of luck.
And since costs tend to escalate out of control in proportion to the length of the trip, may I suggest you reduce your time to, say 15 days, and limit yourself to, say, Madrid (Segovia and Toledo day trips), Cordoba, Sevilla, Ronda, and Granada? That will give you a good overview of an exciting part of Spain, limit your expenses, reduce travel costs, and give you more time to relax and enjoy the sights.
And yes, it will be HOT during July and August, especially in Sevilla....so make sure you can get air conditioning!

I read this mostly because I was interested in the information (for future reference). The last post said to cut the time, but I would suggest keeping the time, but don't be quite so ambitious. Long distance transportation can be expensive, too. Extra nights can give you a break on B&B sometimes - eat more picnics. We even look for places (self-catering or hostels) with small kitchens and cook some dinners. The most expensive part of our trips is getting to Europe. I think you could do it on $200, but it'll be tight - have a reserve.

We spent a month in Spain in 2008 and yes it is one of the least expensive EU countries. Nevertheless I think you would be hard pressed to get by on $200.00 per day. Some days yes you might, but accomodation, meals, transportation, entrance fees would eat that up quickly. Stick with the Spanish hostals for the most economical accomodation. For accomodations our prices ranged from 49-79 Euros for a room with a bath.

As Norm mentioned it will be hot. We went out to dinner in Seville one night at 8:00 PM and the temp was still 37 C.
Have a wonderful time.