I'm having economic problems, any advice?

[Somebody Else]

As long as you tech your economy up first (building roads, wharves &c.). Money should follow. Merchants doing their thing in Timbuktu is icing. Militia units are handy to garrison with, they cost nothing. If you're careful in your directions of expansion, you can leave lightly defended money-pit cities in your interior, with only one army per front to catch any interlopers. So, in Iberia, that means two armies once you've secured the peninsula. (Of course, with the whole peninsula under control, you should be able to support 3 or 4 full cav armies quite easily). Oh, and tax the peasants as much as they'll take, so long as they don't revolt, all is good.

If you need to sack cities for the money, there's something wrong with your economy already. Personal vendettas, suppression of (usually religious) unrest - they're good reasons to go and kill lots of people.

[katank]

One more thing, try not to have governors later on in the game. It's inevitable that they pick up bad traits that drop your income anywhere from 30-70%. Tis horrible.

A 4:1 or higher city to castle ratio and use of militia units to garrison the cities combined with as high taxes as possible and a focus on trade/happiness buildings means you don't really need to worry about the economy.

BTW, invest in a navy. In patch 1.1, the AI constantly does naval invasions. Being able to sink them before they can land can save you from having to get another stack or two to do coastal patrol.

[Slicendice]

Put all the diplomats, crappy spies and assassins and lousy generals on a boat and sail it into the enemy fleet. The fewer sailors on the boat the better.
They'll go down to the bottom and you won't be paying them support anymore. (If I could just do that with my ex-wife!)

Timbuktu may not be as lucrative since you are so close to it, but if you choose that route then build a fort in the spot where you put a merchant and then fill the fort up with merchants. You can get 20 merchants in there all making tons of money and they are invulnerable to enemy merchant attack. I usually march a single general down there and recruit mercs when I lay seige. Once I take it I exterminate the city and disband the mercs. That way I'm not saddled with support, but the city doesn't need a large garison. The city is pagan, heretic, and Muslim so I never notice a hit to my reputation.

If you don't have trade rights and alliances with everyone then get them. Don't sack or exterminate cities unless they are completely Muslim because it will damage your reputation and make it harder to make alliances.

Remember to garison your cities with militia type troops and only those troops that each city can actually produce so that you are not paying support for them. They help reduce disorder and increase growth and or taxes.

Sacking a city is a way to make money but it also allows you to expand military beyond your capacity to support it. Think less military but better quality military. Disband troops you don't need. Also sacking and exterminating destroys buildings and it reduces your tax base. So basically you trade a short term cash influx for a long term cash flow.