Check some thrift stores in your area, they have yarn and sometimes needles. If you have a Joanns or Hobby Lobby, there are coupons you can get online for 40% off items that aren't on sale. Probably Michaels or AC Moore, too. An inexpensive circular needle might only run about $6-7 and less with a coupon or sale. Even WalMart has circulars for about that.
So that's not too much smaller, but you'll find it's very difficult to try and knit looser for more than a few stitches, or a row at best.
As for joining, you can do the first couple rows flat, then join, but to join from the cast on, spread the sts out as much as you can and look at them to make sure they're all hanging the same way and not twisted on the needle. Then join to knit the first round and check them again because they can twist on the first round but can still be straightened out before you start the next one. They're only connected by a single strand and you can put the twist into it.
sue- knitting heretic