I know what it's like to be in your shoes. I came here some 7 (?) months ago with a very similar story - $4k in bills on $3200 in income, roughly. And my credit card debt is on the order of $30k, to boot.
The people here will give you tough love, but it will work. Thanks to much of the advice I was given, I was able to cut my bills way back, such that now, only a few months later, I actually spend less than I earn when comparing the paychecks to the actual bills - groceries and fuel and other living expenses still have a little bit of difficulty staying on-budget, but I have savings to help cushion now - and I have room to breathe.
They will tell you to cut out luxuries - but it need not be crippling or permanent.
- I cut my Netflix way back to the $5 plan and my GF pays for it, for instance.
- I called DirecTV and negotiated my way to a monthly discount - I was prepared to cancel but my family (GF and 5-y-o) protested.
- I shopped around for auto insurance and saved a bunch there. (AIG Direct)
- I suspended my landline phone temporarily, and found I don't need it at all!
- I spent a few bucks to outfit my house with CFLs and a programmable thermostat; as a result I use 2-300 fewer kWh each month than the same months in 2007
- I changed almost all my banking to ING Direct - your wife may be wary, but it's got the best reputation as far as I know of online banks, and every account you have will make interest, even the checking. Plus, no overdraft fees - any overdraft becomes a small, short term loan, and you pay the interest on your next statement cycle after a deposit brings the balance back above board.
I agree with the credit counseling statements here - they're taking 5% off the top, which is money you could just as easily have sent to the creditors directly - the "rate negotiation" they claim is the same as you making your own phone call. Don't do it, you're paying somebody else's bills in addition to your own if you do.
I also agree with keeping track of your money. Even when I was still in the red every month, for the past couple years I got out of the paycheck-to-paycheck routine by doing things like dedicating a savings account to hold all my bill-pay money until the 1st of the month (so it wasn't spendable readily in checking), and keeping myself a spreadsheet and checking all my accounts at least every few days. I also kept an electronic checking account register in my PDA. (Don't have the PDA anymore, but I still check the accounts several times a week.)
Good luck to you!!!