What is the cheapest travel destination in Central/South America (from Chicago)?

When I have priced tickets to South and Central America the cheapest places to get to were Columbia and Panama. Spirit Airlines has some cheap deals including to Lima Peru but I have heard from friends that their service is bad. They also only let you have one 40 lb bag on some flights. But in your case that might not be an issue. Also check out where in the Caribbean and South America Jet Blue flights, because they have cheap flights and good services.

As for the cheapest countries to stay in that would be Bolivia, Paraguay and Peru. The most expensive countries in South America are Brazil and Chile. They also are the most modern so if nice hotels and high speed internet are critical to your travel happiness head there. But I am guess that the experience is more important than the frills in your case. Also any time you can head of of the big city in any country prices get significantly cheaper. I was living long term in Bolivia for $500 per month including rent and food. $1000/month will work in Peru. That is staying in my own studio apartment with shower and cooking some food at home. You could easily spend less if you share a place or more if you travel a lot inside the country. If you barter room and board for working in a hostal you could spend almost nothing during the stay.

As far as cities are concerned, Tegucigalpa, Honduras is most probably the least expensive travel destination in Latin America. My only admonition about going there is to not go there. All those winsome little bits of inexperienced balderdash people love to gratuitously hand out as meretriciously sound advice (such as the lie that staying out of trouble, and practicing good judgement means you're safe) isn't applicable to most places, including Tegucigalpa. I once heard an aphorism that went something like "A bullet knows no name".

Many tourists delude themselves into thinking that if they don't cause a gunfight, for example, any stray bullets coming toward them could simply recoil off them or pass through them as if they were made of some diaphanous foam material or some cell-membrane like substance, and then walk away unscathed. In the real world, Central American gunfights typically result in nearly every innocent person in the shooters' vicinity being shot to death or hospitalized. Don't be a statistic. Don't march into places and think sociopaths with ak-47s give a rat's ass about your life.

But I don't think you're looking for what's the cheapest possible place. You apparently want to know the cheapest possible refuge from the native people and their life's vicissitudes, whilst still being able to enjoy their country's climate and opulent beach resorts turgid with other tourists. If this is the case, I suggest investing in a travel booklet.