If it does turn out to be the alternator, it is probably just the brushes... You can buy just a brush pack with internal regulator as stick it in yourself and save lots o dough. New alternator will probably run ~$200. New brush pack perhaps $30. If you're good, you can even replace it without pulling the alternator....but its a little tricky.

And definitely check them ground wires....and all the others that run under the front of the engine behind the crank pulley.

By no means should you give up on this car... with minor routine stuff, it will run forever. Pretty sure that '78-82 4 cylinders are teh best cars Volvo ever made as far as reliability, safety, comfort, and longevity. Of course, they are a bit boring...but that's OK.

-Matt