Bought my first place last year and did expensive research on this site regarding bidding tactics. The gist was basically: go in as low as possible and ignore everything the EA tells you. When the crunch time comes, it can be difficult to follow, unless you have nerves of steel.
Personally, I would go in with an odd number, more than the other bidder but less than the asking price. If it's your dream house and you don't want the stress of a mini-bidding war with your neighbour, go for the asking. However, it sounds like you need to save all the money you can at this point.