I have used water in the past, but only distilled water. Some acrylics don't break down properly, though, with water only. As a general rule, I've found that Isopropyl Alcohol works great. It's super cheap (far cheaper than hobby shop thinners) and non-toxic.
Tamiya acrylics have responded very well to my $.99 32 fl. oz. bottle of 91% Isopropyl Alcohol!