Google AdWords is almost (or can be) a full-time job and like SEO, you might do something simple/cheap which will have impressive results but something with a greater effect/expense that is not working out at all for you.
I just left a small business (+$1MM/a) that, 6 months after changing hands, is indebted and looks like they'll be ceasing operations. There is so much to learn and it can make or break your wallet just as easily as your business if you aren't very familiar with it (depending on how much control you opt for).
Without knowing your experince with AdWord, my first recmmendation is Adwords Help; Tips for Success, specifically as ageneral optimisation starting point.
Simply; Identify your target market as precisely as possible to reduce your CPC while increasing CTR and goal-completions. Also, depending on how much longer you can hang in there with the costs, experiment a little and see the effects of minor changes until you find what works for you. I'd advise not making drastic changes especially if we're talking about the main source of the bulk of your income!