Arthur Frommer wrote a good Q&A peice for yesterdays Freakonomics blog. Check it out.
Q.What travel tips do you have that might help decrease costs, etc., so that we could accomplish this goal?

A: Realize first that the less you spend, the more you’ll enjoy. Embark on a conscious effort to use low-cost facilities — rooms with private families, apartments that you exchange with a foreign couple, hostels now accepting people of all ages, greeters’ programs, local restaurants, public transportation — and you will, in my experience, learn that your travels have taken on depth and meaning and are far more rewarding than the more expensive approach taken by others.