Filter cheap vodka through your Brita
Trick your party guests into thinking you sprang for Belvedere when you actually dropped $4 on something called "Vudkka" by running it through your water filter. Some people will tell you three times is enough, while others insist you need five or six. It's ultimately your judgment call -- just be sure to label your experiment appropriately for unsuspecting roommates.
Put crappy wine in the blender
Similarly, you can amp up the quality of your cheap red wine by "aerating" it in your blender for 30-60 seconds. Eat it, decanters.