Use glue and sawdust first (it's cheap/free). Here's how to make the good stuff:
Use a scrap piece of cardboard or wood as your "mixing" surface (make sure it's 6" x 6" or greater if you need to make more than a few tablespoons of this stuff)
Gather a small handful of sawdust (preferably collected from the type of wood you'll be applying it to) and put that in the top left corner of the mixing surface.
Put 1-3 teaspoons (estimate - don't ruin your wife's/GF's/mothers/etc. measuring spoons) of wood glue (not gorilla glue) in the middle of the mixing surface.
Wear gloves, unless you don't mind staining your fingers for a few days
Sprinkle the sawdust, a little at a time, on top of the glue, until it is covered with a light sawdust coating
Use a plastic knife (like what you find at cook outs, picnics, etc.) to mix the glue/dust mixture.
Continue to add dust a little at a time, and mix thoroughly before adding more
Continue to do this until your mixture resembles the consistency of cookie dough
Apply this glue/dust dough mixture to the area you want to fill in (use the knife to assist you place it where you want it).
Let it dry for 4-6 hours (or longer if you use a lot of it)
Sand it down for a nice finish
That's it! I've done this a few times and have had great results with it. However, if you need to span a 1/2" gap or more, you may want to do so in a stepwise fashion (add 1/2" or less at a time, let it dry, sand, add more) or avoid it altogether. This goes for almost any type of situation where you use a putty-like substance to "build" a structure.
Cheers!
