This is now a very, very old post but for future readers I think it's still worth responding too.
First of all, why was everyone so eager to rain on nomadiceye's parade? Seriously, half these posts sound like an angry mother berating her child for sticking their finger in the electrical socket (i.e. Doing or thinking something incredibly stupid).
Traveling and making money along the way IS possible.Obviously not nearly as much as a full or even part time job at home but probably enough extend your trip a bit or just not go home totally broke. This is especially possible if you're willing to take whatever job you can get. Some hostels may offer board in exchange for work and may even pay a small salary. You work only a few weeks or less but at least it's something and it's a great experience. Odd jobs are everywhere, you just have to ask and be willing to work. Freelance is also a possibility, the internet makes everything possible. Try websites like www.elance.com/ to get started. It may be slow at first so if you can it's good to get a little experience in the comfort and security of your own home before taking off. If anyone is interested in doing interesting or "alternative" work in exchange for room and board check out http://www.wwoof.org/ or http://www.workaway.info/
As for the Schengan permits, well... I don't think it's nearly as complicated as everyone's alluded. Of course there are restrictions but it's not like the Gestapo comes after you the second you reach your 90 days. If you're traveling within the Schengen states you won't be asked for any documentation when traveling between countries (its a little like traveling between states in the US). This is especially true if you're traveling by bus or even train though the risk goes up a bit if you're flying because you have to show your passport (state or national IDs can work but their airport attendants can choose not to accept it). If you're flying and someone chooses to look thoroughly through your passport and does the math then you can certainly be found out but it's unlikely they would do this. They're not looking for people backpacking, they're looking for people immigrating illegally and other "threats."
Schengan and EU are not the same but Spain IS part of both. Exiting to Morrocco is an option though I'd reccomend just staying within the Schengan states. I've known many people to exit and re-enter to renew their 90 days and while if often works in practice because you get a new stamp it's not technically a loophole. You have to be out of the Schengan states for a while before you get another 90 days. Getting "kicked out" or "found out" often just depends on the laziness of passport security on any given day. If you're just someone looking to backpack around then you're more or less safe.