Thank's for the replies guys! So there has been a change of plans. Turns out family's cell phone contract ends this month, and it's time for a phone upgrade. My sister want's a new phone for christmas, which means I also have to at the same time. I only get a new phone every two years, so I decided to use my christmas present to get the iPhone 5, instead of getting a cheap free phone.

I'm still going to build a gaming pc though. I'm saving up money on the side for one. I've been researching a lot on computer hardware and building custom PC's lately. You're right, I can't get the pc I want for $500. I think my goal will be more attainable on a thousand dollar budget. I found this cool youtube guy who put's together builds for different prices. I'm going to build something similar to his $1000 build which can be seen here:

http://www.youtube.com/watch?v=pKq7SuRzVzk

It's probably going to take me a long time to save a thousands dollars unfortunately. I rarely have any money to save after rent each month.

Thank's for the help again