Arrch:
Solving the problem? Use less strings,
Or better yet, don't use Strings at all.
Use null terminated char arrays, also known as strings.
How? Would someone snow me an example of combining strings, integers, and more strings into a char array? That's what I'm looking for, still haven't found an example 
I basically need to create 12 letter string or char array that will contain date taken from time.h library in format like: "Jan 01, 2012".
I did learn PROGMEM, it's in my sketch (to store big Font). I don't see a reason to store 12 character string in PROGMEM. Problem is not lack of RAM, problem is that somehow variables increase in size with each loop...