a $6 thermometer will be fine. Invest in a basic book, How to Grill by Raichlen got me started. Here's a synopsis from his website on how to setup your charcoal grill for indirect grilling (smoking). I've edited some of it.
To indirect grill on a charcoal grill, light the charcoal in a chimney starter, with an electric starter, or with lighter fluid (vp note: get yourself a chimney starter). When the coals glow red, dump or rake them in two piles at opposite sides of the grill. (Some grills come with special side baskets for this purpose.) Place a foil drip pan in the center of the grill, between the mounds of embers (vp note: you can fill the foil pan halfway with water to moderate temp change). Place the grate on the grill and cook the meat in the center of the grate over the drip pan. If using wood chips for smoking, toss cup soaked wood chips on each pile of coals to generate smoke (vp note: you don't need to soak the wood chips). Keep the grill covered, adjusting the top and bottom vents to obtain the desired temperature (vp note: I recommend 225 when learning, 250 when you get better) . Add 12 fresh charcoals or a corresponding amount of lump charcoal after 1 hour. Leave the grill uncovered for a few minutes until the coals ignite (vp note: don't bother with this, just toss the charcoal on and close the cover. leaving the cover open spikes temps).
vp note: it's all about keeping the temp in range, try for 225-235. if it get's higher close some air vents, lower open up air vents. What you get with a better smoker is the ability of the smoker to maintain a temp with little to no intervention
if you're on a budget, craigslist is your friend. I bought a beautiful weber performer for $25 last year. It's a great grill and good for smoking. WSMs regularly show up < $100. Finally, if you have time, you can make a big ugly drum smoker (try google).
Edited by vinouspleasure - 9/23/12 at 8:43am