Debt negotiation

That is a really hard situation to be in and I feel for you.

With the current state of the economy and how lenders are beginning to tighten their requirements, I believe that your credit score is going to become more important and you should do what you can to protect it.

I would start by calling your creditors yourself and try to negotiate with them.  They, like you, don't want to see you fall into trouble and may be willing to offer some sort of settlement.

Also, see if you can get the student loans put into a hardship deferral for a period of time.

And, as an absolute last resort, cash out some cash from a 401k, if possible.  You'll take a hit, but it may save you from bigger pains later.

x2 on the car downsizing.

x2 on the baby congrats, too

(edited because I misread the OP)

That's called "marriage". 

You can always get out of the lease by calling the finance company and asking for the current buyout amount.  Then, balance that against the value of the car, and see how much you are upside down. 

If its close, and you're a strong negotiator, you may be able to downsize your vehicle sooner.

Or, if you plan to keep it, see if you can refinance the amount through your local credit union.  Better to try and refinance it before your credit takes a hit.

Another thing to think about, is how you could re-arrange your transportation situation such that you can get rid of one of the cars. Even if you still keep the van, you could eliminate that $250 payment on the civic plus up to half of your car insurance costs.

Given that you are renting, you could move in such a way to enable an alternate commute for one of you, e.g. bike distance to one job or the other, closer to public transport, carpool, dropoff, etc.

I totally understand how this is a difficult situation.   Money problems suck and are draining emotionally, mentally, and that takes a toll on you physically.

I've read all the above posts, and agree with them.  My addition is just to say stay AWAY from debt negotiations companies.  Credit counseling is one thing, debt negotiation is something completely different.

My recommendation...call around to various financial advisors.  They aren't just there to help you invest, a lot of them got into the business to help people just like you who are in the situation you are in.  It will take a lot of sacrifice, and you'll really have to rearrange some things in life, but it can be doable.

I've been there.  I know it's rough.  Good luck.

I'll put in another vote for Dave Ramsey...I've read some of his stuff...don't agree with all of it, but I've seen it work for a lot of people.  And don't worry about buying the book...get it from the library!   Or, if you're brave enough, PM me your address and I'll send you a copy that I have.

Call some of these folks you have contractual obligations to.  I'm guessing this is the cable company, cell phone company?  They'll be better served to let you reduce to a cheaper plan than to start missing payments.  Be honest, tell them you're crunched, and see what it does.

You should not be eating out at all.  I grocery shop for 5 and am typically in the $450-500/month range.   It makes a really big difference when you eat out.

If you only pay $600/month for daycare, is your wife not working FT?  Can she increase hours and contribute a little more to the pot? 

One more thing.  I'm sensing from the way you're talking that you haven't ever taken a really hard look at what comes in and what goes out - you're just paying it as it goes, and always feeling behind. 

Sit down and add up all your expenditures and all your income.  Look at what you think you spend.  Then for one month, take every receipt that you get and stack it up in a corner, and you'll be able to see what you really spend, and where.  Once you have that knowledge, you'll be able to make changes.  Until you know it, there's always going to be some reason that you can't do this, that, or the other. 

I was almost EXACTLY where you are less than a year ago, and my finances are much better now, and the stress level is down signficiantly.  I went to a Dave Ramsey live seminar and it was the best thing I've done in a long time.  Honestly.  (and no, I do not work for him and am not trying to sell his wares).  I also read his book, two or three times, and implemented what is in there. 

You are making enough money to make this work without ruining your credit, and without a stress-induced heart attack.  It is just going to take some lifestyle adjustments.  They were hard for us, but we are already very used to it, and happier than ever.  The fastest, easiest way to free up tons of money is to stop eating out...period.  We did that and it freed up more than $800/month.

www.daveramsey.com  

I'm going to sound a little harsh here, but something's not making sense. We're in the same salary range, we have a similar house note and car note, maybe not as much other debt, but we're putting three kids through private school and still doing just fine.

Sounds like you guys need to cut back on the lifestyle.

Lots of planning!  I buy from the advertised specials, I don't buy anything we won't eat, I stock up when there's a good deal, we eat leftovers for lunch.

I do think I need to adjust my budget up, though, because my 9-year-old seems to be hitting the age of the bottomless stomach.  And my little girls, well, they're 3 and 5, so they don't eat as much as you or me. 

It might not be any "big ticket" items either.  Maybe a budget breakdown is in order.  I didn't realize how much money I was spending on food during the week until I really looked at every little $5-10 purchase.  I was blowing through over $50 on lunches and snacks at work. 

you have already received excellent advice and just wanted to add a couple more ideas

-check out www.fool.com  they have really good information on getting out of debt.

- just like training, keep a journal of every penny you spend.  Don't forget to include things that you may only pay once a year such as magazine subscriptions.  Find the items that you can do without.

- deal in cash.  don't pay for things on your ATM/Debit or credit card.  give yourself an allowance in cash and that is all you get for the week/month.  It will definitely make you think twice about that coffee from Starbucks in the morning.

I have been in your situation and wish you the best of luck!!!

I feel your pain...a few years ago, I was making about 70k...my SO is on disability so he was making about 14k...Then I got laid off...all of out saving went to just surviving until I found a new job.  Unfortunately we lost our house...and currently together we make about 44k.  We are still trying to just get ahead a little bit so that we can start to rebuild.  Everyone tells me to just find a better paying job...we I have been trying...going out on interviews, but there always seems to be someone out there, just that little bit better.  I like the job I am in...but it hardly pays.  I am hoping this year, my back taxes will be taken care of...or atleast arranged.  And I can start worrying about the other debts. 

It also doesn't help that SO is a compulsive spender...and I have a problem saying no...but I think thats a completely different thread.