It would make sense to put Lima at the end of your visit, and there is enough to see there to spend several days.

Maybe Cusco for New Year's Eve? There are more bars and nightlife there than in the quieter parts of the Sacred Valley.

Another option would be Aguas Calientes for NYE.

You need a permit for hiking the Inca Trail, even the two day. Contact an agency as soon as possible, I don't think you will find any permits for the 4 day trail for your time frame, but the two day may be an option.

Great to know!
Thoughts on having time to go into the Amazon?

Hike or train? Since I did just one trip and took the train, this advice is from a limited perspective.

I chose the train to allow for more time in the jungle regions. Your month of travel could be rainy, which might give points to train over hike.

In addition to the 2-day option mentioned above, I also heard about a one day hike, more like a walk, but it might work if the other options are filled.

If you are keen to hike, but there are no slots open for MP, consider the Lares Valley, which is more cultural without ruins along the way like the Inca Trail.

Now to Amazon:

This link may help.
http://www.fodors.com/community/south-america/what-is-the-best-amazon-jungle-experience-for-wildlife.cfm

As it progresses, it narrows to just Peru.

It contains yet another link to a photo-illustrated report on MP, plus two Amazon/jungle excursions.

Or without photos, here's that report on Fodors.
http://www.fodors.com/community/south-america/peru-kaleidoscope-of-colors-amazon-cruise-machu-picchu-jungle-lodges.cfm

In summary, those jungle trips were

1) Leaving out of Iquitos I took a 7 day cruise on the Ayapua Boat to Pacaya-Samiria Reserve. A small part of the trip was on THE Amazon River and the whole trip was in the Amazon basin. Pink river dolphins were my #1 motivation for this trip and I saw 75 or more. In addition there were caiman, monkeys, a variety of birds including macaws and toucans, a sloth, frogs, snakes. Also cultural interactions. We did walks at all times of day and night and dugout canoe trips and spent time learning about the vegetation and its medicinal uses. Usually about 14 guests, we were 8. Top notch trip.

Although I did not do this, I investigated Muyana Lodge, also north of Iquitos where you can stay 3 or 4 nights.

2) Leaving from Puerto Maldonada, I stopped at Reserva Amazonica for a canopy walk. You could also spend a few days there. More remote is Tambopata. Heath River Wildlife Center is where I stayed 3 nights. You do jungle walks at all times of day and night and dugout canoe trips to see monkeys, caiman, but the BIG attraction here is the clay lick along the riverbank which attracts the macaws and parrots. A world class phenomena. You can call it quits after 3 nights (or even 2 nights) ~OR~ add in a couple of nights at Sandoval Lodge for mostly non-motorized boat trips on the beautiful lake and do a few walks. You'll likely see caiman, monkeys, turtles, otters, the very colorful and unique hoatzin bird, macaws (but not in huge #s on a claylick). It's also possible to do just Sandoval Lodge without Heath River.

So there are several jungle/Amazon trips where you can stay from 2 nights to a week or more.

I used Green Tracks for all parts of the trip.

I highly recommend NYE in Cusco for a great experience. The Plaza de Armas is filled with people and you get to see some cool traditions. At midnight, there are the usual fireworks and people also run 3 loops around the Plaza with a suitcase or travel bag, wear yellow underwear, and/or eat 12 grapes - these are all supposed to bring you good luck. You can participate in the action or watch from a balcony. And of course, the nightclubs keep going until the wee hours of the morning.

Inca Trail permits are sold out for the period of your travel, but you would still be able to do a trek like Lares or Salkantay, both of which end with a trip to Machu Picchu. If you'd rather spend your time in the Sacred Valley, you can do things such as horseback riding, mountain biking, or day hikes.

From Cusco, there are daily flights to Puerto Maldonado, where you could spend 4 or 5 days at a jungle lodge before getting back to Lima. The contrast between the Andes and the Amazon is incredible and I definitely recommend adding on an Amazon tour if you can.

The only thing to keep in mind is that Dec/Jan is the rainy season in the Andes and heavy rains can affect flights going into and out of Cusco. You should leave some room in your itinerary in case flights get cancelled or delayed.

Pack some rain gear and inform yourself about what to expect - despite the rain, this is still a fabulous time to visit Cusco.

Happy travels!
Anabel

I recommend flying to Puerto Maldonado/Tambopata first and doing a 5day/4night adventure. Then fly to Cusco and relax and maybe do an afternoon city tour. The next day you can visit the Sacred VAlley ( Awanacancha, Pisac market/ruins, Ollantaytambo ruins, Chinchero). Then take the train to Machu Picchu and spend the night and the next morning visit Machu Picchu and Huayna Picchu and in the late afternoon train back to Poroy and spend the night in Cusco. Perhaps another day you can visit Moray Maras Salineras with a visit to the Laras hot springs. You can visit the southern part of the valley (oropesa, Tipon, Pikkillaqta and Andahuaylillas). YOu can celebrate NY anywhere in Cusco. If you stay in the Marriot hotel then that would be the perfect place to spend NYE.

If you cannot get tickets for the inca trail then I would highly recommend the Lares trek as suggested by LatAm. We did this a few years ago and it was he highlight of our time in Peru. More info on our blog
http://blog.travelpod.com/travel-blog-entries/candcthai/1/1219334700/tpod.html

Thank you for ALL of the feedback-it is very helpful!
I am thinking that we will be doing the train up to Machu Picchu to save time.
Thoughts on substituting the Amazon for Galapagos Islands?

I heard it's expensive to fly from Ecuador to Peru....my friend is doing Galapagos and Macchu Picchu next June...he ended up using miles as airfare was in the 600.00 range....air fares are so crazy, who knows...just relating his experience.....

I'd suggest that you spend as much time as possible in Peru where there is so much to see, rather than spend time transferring between destinations. It will probably take 2 days at least to fly from Peru to the Galapagos and you would need 4-5 days to explore a couple of the islands.

Maybe visit the Amazon from Cusco by either a short flight to Puerto Maldonado or if you have 5 nights, you could look at the Manu Biotrip http://www.greentracks.com/Manu-Bio-Trip.htm which includes a drive over the Andes from Cusco to the Manu Cloudforest and then on further to Manu Wildlife Center before finishing in Puerto Maldonado. I've done the first part of this trip and highly recommend the drive over the Andes for traditional towns such as Puercartambo and the experience of driving into the Manu area over steep-sided narrow roads and the varied bird and animal life. Highlights were cocks-of-the rock, capuchin monkeys, tayra, an emerald tree boa and golden-headed quetzels on this trip. My photos from Peru are here if you'd like to see, https://picasaweb.google.com/Treepol/SouthAmericaPeruInclManu
I've stayed at and enjoyed Explorama's Ceiba Tops (out of Iquitos). Explorama operate a number of lodges out of Iquitos to suit a variety of budgets and comfort levels, http://www.explorama.com/


Happy planning,


Pol

Still working on the itinerary!
We are booking our tickets from Lima to Cusco via Peruvian Airlines which has proven hard via their website (waiting for a rep to return my email) but I was surprised to see that round-trip tickets are $400+!!! I was expecting it to be more on the $250 range so this has placed a damper on the budget. Because of this, we are contemplating just sticking to the Sacred Valley and do day trips from Lima...I am still open to suggestions for trips near the Sacred Valley or Lima...anything that is considered a cheap flight away!

Day 1: Arrive in Lima at 6am, take a 10am flight to Cusco that same morning. Rest. Spend the night in Cusco or head straight to the Sacred Valley to have a better acclimation process. I was told that spending the night in Cusco is better though so that we can book our MP entry tickets and train tickets the following day...
Day 2: Sacred Valley with our base in Ollantaytambo
Day 3: Head to Aguas Calientes. Spend the night here
Day 4: MP at the break of dawn and spend the night in Aguas Calientes.
Day 5: Cusco
Day 6: NYE in Cusco!
Day 7: Flight back to Lima or some other place that will be a cheap bus ride/flight away
Day 8-?
Day 9-?
Day 10-?
Day 11-Flight back to the USA for one of our companions
Day 12-?
Day 13-?
Day 14-My flight back to the USA

So again, we are thinking of of just sticking to the Sacred Valley and Lima but I fear that this may be TOO much time in Lima...I'm honestly not even sure if there are enough day trips or short 2 day trips near Lima. it's just difficult since my sister is leaving a couple of days before me so we don't want to be too far from Lima. So as you can see-I am stuck!
Sorry to keep this topic going but any suggestions will be helpful!

Also, I don't think the Amazon is a possibility. We don't have time to get the proper vaccinations...I know, poor planning on my end but I blame it on graduate school taking over my life!

I forgot to ask-do you think it is better to just wait to make travel arrangements in Peru vs online? I'm assuming I am going during peak travel time and I don't want to end up stuck in Lima the whole time!

How about going to Lake Titicaca? You can take the bus there on day 8 from Cuzco, do a 1 day tour on the lake on day 9, then fly to Lima from Juliaca on day 10. They your friend can leave on day 11 and you can spend a few days in Lima.

No, don't wait for your plane and train tickets. And I'd probably look for lodging now as well.

Transfers and taxis you can arrange with your hotel.

As far as the Amazon, you really don't need yellow fever shots if you are going to Manu.

Lake Titicaca sounds like a good idea! Thank you both for your suggestions.
Has anyone flown with PeruvianAirlines? I am STILL waiting for their response regarding our issue paying for the flights via their website.

Sorry, just Star Peru, TACA and LAN.

Honestly if you really need to talk to anyone this time of year it is better to call. Do it during 9 to 5, Monday to Friday, Peruvian time.

If you don't speak Spanish, just learn how to ask if anyone speaks in English, usually there is at least one.

Thanks for the suggestion-I do speak Spanish so I called and was able to get through right away!
I would like to get your opinion on a change to the itinerary. I'm thinking that Arequipas and Colca Canyon may be our best option. I was able to find a packaged flight for cusco, Arequipa and back to Lima.
My question is, does it make sense to visit Arequipa before Cusco or after? We will have time to acclimate to the altitude while in the Sacred Valley since we will be there for a couple of nights before staying in Cusco. In addition, are 4 days enough for Arequipas and Colca Canyon?