Another (but crazier!) way...

This year cut zero and sign zero. Try to eek out every possible win. Basically, do as mmt0315 says.

Year 2. Use money for 5 to sign 3. With luck and possibly less competition you could get some studs. This is the time to change Off or Def if you wish.

Year 3. Use money for 4 to sign 3. Typical year for most. Good luck!

Year 4. Use money for 6 to sign 3. You'll need to sign a stud or 2 here.

Year 5 -- > Use money for 3 to sign 3. Typical year. Good luck!

I know having extra scholarships will slow improvement but it's only a teensy tiny bit at this level. However, you'll end up with balanced classes (probably) and possibly some VERY good players. Also my advice should be taken with a grain of salt. I may have more losses than anyone else in HD. 

I really want to thank everyone for their advice and help. Please know it is truly appreciated. You guys gave me 2 or 3 different ways to go, all solid plans if done right. I've decided to cut 2 this season and go after 1 recruit that will hopefully be better than what I had. If I can't get that 1 decent recruit I'll take 2 walk-ons and hopefully have a very good class next year. The key, either way, is going to be making the NT this year and getting a bump in prestige so I will have a legit shot at some strong recruits next season. Thanks again all!