You can trust my information. I went to Disney every year since they opened, except for the last two years. We had yearly passes for at least 4 years so I feel that I really know quite a bit about it. We have stayed on site at the most expensive places and least expensive places and off site .
My advice (to save the most money) is to stay on Rt 192 east or west where there are many inexpensive motels and hotels. You can find many nice places within 3 miles or less from the main gate. Go to AAA and pick up a Florida book and get a motel that offers free breakfast and where there are refrigerators in your room. Bring lots of baggies and pack your lunch. You can sit and eat in many places. I would also beg, borrow, or steal a double stroller for the children so that they do not get tired from all the walking (They do rent strollers there but I am not sure about double ones.)
Staying within WDW sounds very easy,but sometimes it is a very long walk to transportation. The lines can get long for transportation and the food is expensive for someone on a tight budget. Also, the economy rooms cost twice as much as what you can get outside the Magic Kingdom and be half the size. If you stay on Rt 192, you will find many inexpensive restaurants that will be great for the kids……………….lots of chains and lots of "mom and pop" places.
I wish I had a hundred dollar bill for every time that we have been to Disney World……… I think that I know all the "ins and outs" of doing it on the cheap.
And if you can talk your wife into going at a different time (after all, a child is not going to miss that much of school), you can get some wonderful hotel deals. Feel free to email me if you want to know more.
The one splurge that I would do with little girls your age is breakfast at Cinderella’s castle. The food is good; served at your table and plenty of it. They will be thrilled with all the Princesses that come around and it is just perfect for kids their age. Sometimes, small ones are frightened when characters approach them but they will love the ones who appear at the castle.