Hosting your own server?

Has anyone set up their own server not like host a website off your computer but host an entire server. If so how did you guys do it, or more so how can I do it, I have been wanting to host my websites from my own server so I dont have to pay the monthly server fee's and deal with all the limitations. I know i would have to buy my own server but after that i could use it as my own and hosts friends websites off it also. Any ideas or tips?