I use a jigsaw. It works okay, although it requires a lot of clean up. If you're on a budget, I don't see why a jigsaw couldn't do an adequate job.
"I'm currently debating whether or not to do a belly contour (any opinions on this is more than welcome). I'm also considering making my own compensated nut. "
I recommend the belly contour. Anything that makes the guitar more comfortable to play is good, in my opinion.
As to the compensated nut... I suggest you save that for another project and make a "standard" nut for your first. Of course, if you're careful, I'm sure you could do a great job of it. Me personally, I would be worried about attempting that. Just my 2 cents.