First post here so thanks in advance for reading!

I have just been picked up for a pilot slot in the Air Force and want to right my financial ship before I go to officer training. Here's my current situation:

Currently I make about 4k a month after taxes and this breaks down to the following:
Housing $1200
Car Payment $500
Gas $300
Sending money home $400
Utilities $300
Savings $300
Hobbies: the rest

I have the following assets:
House that I bought for $140k, worth about 130k, owe about 133k. (guess it's more of a debt than an asset right now)
6% APR 30 year mortgage

Hyundai that I bought with cash in July
Infiniti that I financed last year
10k in savings
60k in 401K (I won't touch this)

My biggest worry is this:
I'm getting married next year and I am joining the Air Force. Upon joining, I will be taking a HUGE pay cut, to the tune of about 50-75%. The first three months will be spent in officer training so I will be making E-5 pay without any allowances, so about $1500 per month before taxes. After that I will be making about 40k a year as an O-1. We plan on living on base so I will not get a housing allowance.

I am afraid that with the house and the car payment we will run into negative cash flow for a long time and I'm currently being killed on interest with the house being underwater.

My fiance/wife will be finishing her nursing degree later this year and we are hoping that she will be able to make at least 40k starting out, but she will start with 30k in student loans to pay off.

I've been brainstorming ways to lower our negative cash flow and have come up with the following, please tell me if this makes sense financially. It will involve hurting in the short term to hopefully be in a better place long term.

Plan A
1. Sell the Hyundai. I paid 20k cash for the car four months ago. I am willing to take a 2k loss on it to free up 18k in cash.
2. Take the cash and pay down the mortagage enough to refinance to a 3% loan.
3. Take whatever is left over and buy a beater car for myself.

OR

Plan B (I don't really like this one as I LOVE my Infiniti, but if I must I'll take care of business)
1. Sell the Hyundai AND the Infiniti. I would sell the Infiniti for what I owe on it (23k). This is more or less a fair price on the car. That will get me out of the $500 a month car payment.
2. Refinance the house
3. Drive a 94 Ford Ranger and take whatever cash is left over to buy a nicer safer car for my wife to commute to work with.

I think I screwed up a couple of years ago because I had no idea that I would be joining the Air Force to fly jet fighters, I was really planning on sticking with my current job (80-100k/yr) for the longer term and made a bunch of purchases based on the belief that my current income would continue.

Has anyone been in a similar situation? Does this plan make sense financially? Can anyone offer a better solution?

A bit out of my experience. But I'll make a couple of comments.

First off, will you be eligible for VA financing as soon as you join? That might be better than a conventional refinance.

Sell the car(s) asap

You're right, you've got to right the ship. I can see how you were in good shape before this opportunity came up, and it is a great opportunity so no real criticism... but it is putting you in a bit of a bind so you'll need to make some sacrifices quickly but you know that.

Thanks for the advice. I guess what burns me about the whole situation is that I'll be taking several thousand dollars of loss on the car even though I've only owned them for a couple of months/a year. That really stings!

And I'd pay several thousand for a chance to fly a fighter jet...

Start with props first. I know this outfit is legit because I've flown with them. There is a similar outfit in AZ but check them out thoroughly first. Scammers abound.

Oh jeez! My wife is gonna hate you!

By the way, I think your outfit deserves some props today as well. Congrats on the maiden flight of the Dreamliner!

Thanks. But actually, that's just the first maiden flight for a US airliner. It's been in service in Japan for several months now.

Interestingly enough, BA put out a whole bunch of FUD about the A380 while the 787 was so far behind schedule. But that's fodder for another thread.

No she won't. My wife didn't. She just had me take out a big fat supplemental insurance policy.

Well, bad news everyone...

I went to the bank and was told that since I will be deploying and thus leaving the house, they would have to treat it as a rental property refinance and thus only fund 75% of the cost.

So.... what now?

If I go ahead and sell my cars I will have 0 cars, save about $600 a month on car payments and taxes, and will have about 15k left over to buy cheaper cars with cash.

Is that still good enough to spring on, or is that too much loss on the cars?

What bank do you belong to? You're not leaving until next year, right, so why won't they let you refinance the house now? Maybe you shared too much information.

Look into Navy Federal Credit Union or USAA. You may have to wait until you are officially in the Air Force (unless you have a family member that is military that can offer you a membership). Are you planning on renting out the house or selling it altogether once you move?

Again, I don't have a lot of sympathy. You are making a great choice, and I thank you for your service, but, in the end, it's a sacrifice and you already knew that.

That said, I think my first stop would be to talk with someone the military might make available to you. There are special rules about military deployments. I think the rule they are citing has to do with owner occupation. It might not apply to deployed soldiers. I don't know the rules, I'm just guessing. This is a common problem with military people so someone should be able to help you.

I'm also going to suggest you get on the "Earlyretirement.org" forum and directly contact a guy that goes by "Nords." He has actually written a book about finance topics for military people and had received some kind of award from USAA. He may not know the answer but he'd probably be better positioned to suggest something to you.

Otherwise, I don't know how it works but if you have some sort of recruiter or sponsor (maybe a ROTC commander) then maybe they can tell you where to turn.

I'm not completely unfamiliar with special rules for military people as I used to have some reservists working for me who got activated. I had to get smart about quite a few rules to help them (or their wives) out. I know that deployment could not effect health benefits, state residency, pension vesting, or numerous other things but mortgage issues never came up.

This should be early-retirement.org I believe.