I personally wouldn't recommend dropping too much beyond your budget on your first run of gear.
First and foremost if you do "slightly above" where you want to spend, you'll wind up with stuff that you're going to still want to replace... but you'll wait until it's worn to shit first. That's not a bad philosophy with gear, and it's good to avoid being wasteful, but if you wind up disliking your pack after a season or two, good luck with craigslist.
Another issue is that some /out/ hobbies sound cool the first couple times you try it, then you realize you don't want to do it every weekend in the summer. Suddenly you dropped 200 dollars on gear you use only two or three times.
Again, this is why I would say go cheap your first run of gear. Exceptions would be things like climbing gear, dirt bike helmets, or really anything safety oriented.