Some good tips from maximus, but rather than taking fairly drastic measures in RTW you can go for more of a long term plan.

Someone explained this to me a while ago, so i'll do my best:
-decide which cities you want to be producing troops (close to frontiers or whatever)
-build these cities up to generate income from farming, but also to be militarily strong, ie. concentrate on barracks rather than traders.
-recruit your troops from these cities. they will have a trade deficit (lose money) BUT you cancel this out by focusing on income (not farming though, because of the population increase) in other cities/towns.
-these will pay for the 'expensive' troop producing cities

Takes a bit of self-discipline, but is a good way of managing squalor and keeping populations low in certain cities.