Hi CS,
This sounds very scary to me. We're living on one income too, and some months can be sooo tight!
If your savings are dwindling, and you're selling stuff for extra cash, you are not (I would think) living paycheck to paycheck... because you are spending more than the paychecks are worth. You are, it sounds like, going 'in the hole.'
It sounds like you are doing everything right from a budgeting standpoint (except, I'd say get rid of the Dish, but that's just me - lol). And I'd never suggest your children would be better off anywhere else but with you in your home... But what will you do when your savings are gone, and you've sold all your belongings, and the next bills come?
Sorry, I don't mean to scare you, really. But please start looking into {{something}} - maybe part-time, or an afternoon job, or work-from-home, or selling homemade cookies, or whatever. Have something "in the works" before things get any worse (which, they may NOT, but be ready... right?) Who knows, you could end up being this country's next great entrepeneur (sp!), but it can't happen until you start something going.
T