I found myself in a similar budget situation in that there was not enough left to cut in order to not be teetering on the edge of disaster. Something significant needed to happen. I could not see how I could, as a single parent of four young children, reasonably take on a second job.
I sold the best house I had ever lived in and that my kids had ever known and moved 35 miles away to a town we had no connections in but the house is half the price. It is not as 'dream house' like but it is equally acceptable and in good shape etc. It has not been easy. Small towns are very nice and easy to live in, very difficult to make real friends in if you are an outsider (well a single woman with four kids kinda outsider anyway). My older kids were not very happy at first (younger one's are fine). They have more freedom in a small town.
However - the financial relief/security that was gained has been worth it. Summers are my most difficult time because of child care costs but I can save enough throughout the winter to make it work. It is still paycheck to paycheck but I don't have to hold my breath and pray every month either or wear snow suits in the house to stay warm.