My advice, based on you wanting to save money, is to make your way to an auction (I know you can't go tomorrow, but there will be another one in 6 weeks or so) and pick up a cheap cabinet with working monitor. That is, to my mind, more efficient than trying to save $$$ on the encoder. You can reuse the controls immediately (if you want to replace them, then you can do that at your leisure) and are most of the way there.
My current MAME-based project is a cabinet that I picked up at the SB auction for $50 or $75 (can't remember which). A Xenophobe converted (rather well, I must say) to Golden Tee 99. So, for $75 (or $50), I got a nice trackball, cabinet, coin door, monitor, JAMMA harness, PCB and power supply. I can sell the PCB and PS (and trackball adapter harness) to offset some costs (except that I have already installed the PS in another cabinet). I also didn't have to buy new controls since this MAME project is based around the trackball. If you find yourself a 4-player cab, then you instantly save some $$$ on joysticks and buttons (which you can replace at your leisure).
To my mind, the core cabinet workings, including monitor, are the easiest place to save money and you have the advantage of being close to the most frequently recurring arcade auction that I am aware of.