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This is the cutest idea for a rainy day activity that is educational and fun!  Create a letter box scavenger hunt using baby food containers. You make the boxes and let your child's imagination run wild while they search for things to fill them with!  Get step by step instructions for creating this game as well as lots of other great learning activities at "I Can Teach My Child" blog.
 
Download and print free patterns from Amy Butler Designs to make your own quilts, pillows, and other homemade items.  You can download and print as many patterns as you like. 
 
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I just discovered this site that has tons of cute craft ideas you can do with the kids on the cheap.  Very inventive ideas that use things around the house and turn them into adorable crafts like the plastic lid ladybugs shown here.  Thanks, Crafts By Amanda!