I recently bought a 2000 Toyota Sienna with 139,000 miles for $3800. Sure the gas mileage isn't great, but I need it so infrequently that it doesn't really matter to me. Here's a couple pluses with a car like this. It's a Toyota so it runs great, I expect at least another 60,000 miles out of it (or about 10 years). It has tons of room for stuff like fire gear, camping trips or the kid's bicycles. Also, my insurance is only $30 a month because it's so old.
You could buy a low mpg car like this, and a 10+ year old honda civic for less than $10,000, and you'll probably still be driving them both in 10 years, and you'll take a much lower hit on depreciation and insurance costs. I like to employ a multi-car strategy when driving old cars. That way if one of them breaks down you can drive the other one to work.
Also, as much as I like VWs (my other car is an 03 golf), they're a nightmare for mx as they age. I do all my own mx, drive a normally aspirated 2.0, and I'm still generally putting about $300-$400 a year into the car (this year it was struts, a broken water pump and a timing belt, right around $400). Just wait till the high pressure fuel pump on the TDI blows, that's a multi-thousand dollar part.
Good luck with whatever decision you make.