Definately turn the auto merchent off. Maybe if you are swimming in cash you can use it, but not normally.
You can use that attrition rule against the AI. Often times they will start to besiege your terittories with large armies. Instead of rushing right at them, wait a month or four. They're forces will be whittled down and you will have an easier time of it.
If you have excess cash, consider making loans to other nations. This way you will gain interest income. Be careful that you only lend to friends so you don't wind up in a war with them and loosing your money.
If you are besieging a territory that has a port, it helps to station a fleet next to the port to blockade them. Even before you get the blockade ability, this will shorten sieges.
Attrition also has a movement function. It will happen to any size army moving at the end of a month. So when possible, move your armies on the 1st. If you are in no hurry, move them one provence per month. This cuts down on your attrition quite a bit.
Patience is the key to this game. I am playing the French in the age of exploration and it is early on. I want to take the Dutch provences from Austria because they have french shields on them, and because having the Trade center in Flanders will be a big economic plus. I could have attacked right away, but I waited until Austia was involved in three different wars. Now I am crushing them, and will soon be able to take a few provences that I want. Their opponents include England, Spain, Poland, and a host of small nations. Add me as France to the mix and they don't stand a chance. I haven't even seen an Austrian Army
Also remember that short wars can be successful, long wars rarely are. I don't plan to conquer all of Austria in this war, nor even get all the French homeland territories that they own (I'll still have a causi belli against them this way). I'm looking for 2-3 territories and that is it. Once I can get them, I will ask for peace. There is plenty of time for later generations to wrest the Tyrol from their grasp

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