I made a speedo for my cnc mill *really* cheaply one day in a pinch. Basically we'd hacked the pulleys to make it much faster but we didnt have any idea of what speed it was now running (because of belt thickness etc) as the pulley was quite small the variances were large and I wanted to know how fast it was spinning.
Solution? Get a thin metal rod, drill a hole in it.
Get an ir led and ir led sensor - it my case I only had ir leds - but thats okay, they work as sensors too!
Get a square of any material that will block the light. Drill two holes through it at 90 degrees - one the thickness of the rod the other the thickness of the leds.
Clamp the rod in the chuck of the spindle.
And you now have an interruptor sensor. Measure the waveform on an oscilloscope and you can calculate the speed.
It was a nice 3600rpm in the case of my mill :)