hi D.. i am very sorry for how you must be feeling and being worried about your future, your children's future, and your nanny's future. it sounds like you are a good person, who truly had the best of intentions and had a tough decision to make concerning this.
i am not sure what was so misleading in your post to others... but from what i got from it was that this nanny lived with you only part time, "4 days a week." (Your words.) so it is my understanding that she was living elsewhere for the other 3 days a week. so she obviously had somewhere else to go, and you are not an inconsiderate monster who is throwing someone out in the snow. the fact that she was living here for 4 days, AND getting 500 bucks sounds awesome! i want that job! lol.
i don't have any advice other than i thought if the nanny lived with the family... the room and board was sort of part of the package deal. and then days off, use of a car, above and beyond spending money, going on paid trips with the family... was all the better?
if she was getting 500 a week for 4 days of work... thats 125 a day everyone, probably tax free. i am sure that you most likely were not gone more than 8 hours for your own job... so unless she was working slave labor (for lack of of better term, no offense intended) 24 hours straight on those days... she was getting over 15 bucks an hour AND a place to stay those days.
i think you were very good to her from what it sounds to me. and i respectfully disagree with those who are jumping to conclusions, and/or did not fully read your post that she WOULD NOT stay for any less... which means you obviously talked to her about it previously before letting her go, hence why you knew she wouldnt stay for any less money.
i wish you luck in your search for a new path for your family. i do agree it is hard to find someone you can trust. i am sorry it didnt work out with this woman and i don't think it would hurt to send her a letter letting her know you think the world of her and would keep her if you could afford it.
we are in a poor economy right now that is effecting more of us than not. we are ALL forced to make changes in our lives right now to accommodate this economy. i think you are doing the best that you can given the hard decisions you had in front of you. i am sending positive vibes your way and i hope you are able to find some peace with this.