Exercising your hips will do exactly the opposite of making your hips smaller. Exercising your hips, particularly cycling but also running and walking will build some muscle on your hips.
Its only losing weight in general that will lose weight on your hips. But if you naturally big hips or bum you would want to limit exercise and muscle building on that area.
However, i think that when you are slim anyway, its better to be fit than avoid exercise for the sake of not building muscle.
From looking at your pictures, the biggest part of your problem is saddle bags. you have a pear-shaped body type. This is just fat. You need only to lose weight through your general diet and they will go. I"ve got saddle bags too. I've lost weight before. But it is our natural shape and you can't change it really. When you put on weight, those saddle bags will come back. The only way to keep those saddle bags off is to be skinnier. And you may have to get used to the idea that there will always be some hint of them. So learn to accept them while you go about losing weight and getting fitter. and don't think you can get rid of all trace of them because trying to do that will make you too skinny in the top side of your body. When my bum is the right size - because my bum is my biggest problem, i have practically no boobs at all and my ribs show. So i am not going to try to go there again. Well i might if i was younger but at my age, its better to keep some fat to prevent me looking to old in the face.



and I feel like my insides are going to implode so I stay away from Spanx 

Good luck to you as you continue your journey. You have already done an amazing job!
I was happier when I was heavier 'cause I didn't care about my weight but now that I do, I get grumpy every time I take progress pics. But I am a happy person overall, believe me! Hehe
- I am a bit fashion challenged and shopping for different sized tops and bottoms is such a pain