Before we begin, let me say that ours is tailored to our needs and our uses. We use a pump to get the rain water off of our pool cover, and we decided to run the discharge hose right into our rain barrel. Our rain barrel can also be modified to use for a rain gutter.
To start we picked up a 50 gallon bucket/barrel. Let me say that you could use anything. We looked at using large blue barrel, but the pricing was a little out of our range. So we went for the $25.00 50 gallon bucket from the hardware store. We also picked up an outdoor hose bib. (Specifically, we purchased a 1/2" and 3/4" flanged sillcock, about $5.00).
Kevin again took his speed-bore drill bit and drilled a hole into our barrel (be sure not to drill your hole too low and make sure you have enough room to hook up your hose)
Once the hole is drilled it's time to screw in the hosebib. If you want extra reinforcement you can always put a bead of caulk around the base to seal your faucet or use Teflon plumbing tape around the threads.
After the faucet was in, we started work on the top. We drilled small hole (similar to the one for the faucet) on the lid so Kevin could get the jig saw started to make an opening for the water to get into the barrel.
Once the hole was cut out of the top we sanded down the edges so there weren't any sharp pieces left.
SIDE NOTE: We also drilled another hole in the top to put our pool pump discharge hose in to fill it up. You wouldn't necessarily have to do this if you wanted to put your rain barrel under a rain gutter.
Finally, hook up your hose and get watering! We used a portion of left over hose that we had laying around, but you could also use a soaker hose or regular hose.