We lived in Connecticut for a few years and loved it... and didn't spent anymore living there then we spent while living in Indiana, Utah, Florida, or New Hampshire. Of course, we were also renting so we didn't have the huge housing expenses you have. If you are looking for ways to save money/reduce expenses than you'll find them, just keep looking and asking around about how others you know (who are in a situation similar to yours) are saving money. Your obvious starting point is downgrading your house, but that will be difficult while the market stabilizes. Look at doing some of the small things, eating out less, getting your movies from the public library, eliminating a credit card or number of minutes on your phone, etc. If you make a few small cutbacks you start saving quite a bit rather quickly. Good luck.
Tyler Christensen, M.Ed