The Bali thing is also kind of a mess for those on low budgets. Kuta is a headache, and pretty much the opposite of what is so beautiful about the rest of the island, but it’s also where nearly all the really cheap beds are located. If you go a bit north in that same area into Legian and Seminyak, it’s nicer, but prices also go up. And Ubud is nice, but also more expensive for hotels and such. I’ll probably rent a place in Seminyak for a few weeks, which won’t be cheap.
The 2nd option is a bit early in the year. The Greek Islands are cold and mostly deserted until mid April or so, and the good weather really starts in May or June. This is true in Mallorca as well. The Canary Islands are much farther south so they have acceptable beach weather almost all year, although you might get some cooler days in March as well. Even still I wouldn’t really recommend them for a younger person. In my opinion, the Canary Islands are pretty boring because the majority of visitors that time of year will be retired people from northern Europe who just want to sit in the sun. The nightlife tends to be cheesy and/or weak if you can find it at all. Let me know if you have any other questions. -Roger
The high season hotel prices will start in November as well, but crowds are usually thin for most of the month so you should be able to get some nice bargains at some of the nicer places that allow online booking. When they see that they have lots of empty rooms as the month approaches, they'll discount to be on par with some of the 2-star places that aren't nearly as nice.

Traveling during the last ten days of December means crowds and exorbitant prices throughout much of the world, but the first two-thirds of the month—before holiday airfares and hotel rates go into effect—can be a serene, value-laden, and just plain lovely time to vacation. Europe is all decked out for the holidays—with locals generally friendly and in high spirits; in the Southern Hemisphere, spring is in bloom; and in the Caribbean, Hawaii, and Mexico, hurricane season is over, the weather is gorgeous, and there are free upgrades galore.
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