Sure, in home daycare but we feel the social benefit is worth the additional cost. In our area in home costs roughly $360-380 per week versus the $450 we pay. It's a big difference but I will sacrifice many things before I disrupt their lives, they love their teachers and friends.

Here's my brainstorming:

You said you have $6000 in savings and your wife is $6000 upside down on her loan. Looks like you can sell her vehicle and pay off the lien with savings. That would free up $590 a month plus insurance costs. You could apply that toward the purchase of a cheaper vehicle or just go without that second car.

Maybe it's the area you live in, but the mortgage seems high. Is there a possibility of downsizing or just moving into a less "fancy" home.

You mentioned that you weren't willing to disrupt your childrens' lives for the sake of cheaper daycare and that there are a lot of other things you would sacrifice first. Please consider that money troubles can cause sacrifices for your children in the future.

How about you or your wife staying home? I don't know how much of the income belongs to each of you, but it would reduce the need for a second vehicle and daycare costs. Of course, there are a lot of variables to weigh in making that decision, most of them personal.

Don't take this the wrong way but shelling out that kind of money so the kids can be in the "right" daycare so that they will be accepted into the "right" private school so they will be accepted into the "right" Ivy league school so they can get the "right" job & marry the "right" spouse is setting the table for them to think that the world should be served up to them a on silver platter. Obviously I'm being facetious but the point is that rarely does a child who starts life at in a cushy daycare wind up going to a trade school to become an auto mechanic. You're barely treading water now...what happens when they get into to high school and/or college & want you to pay for tutition, new clothes, cars, smart phones, allowance, etc? What happens when you reach retirement age with very little saved because you spent everything keeping up your child's social standing?

not saying this is the OP's situation (and not saying it isn't!)...but some parents who spend little time with their children think they can make it up through spending money. Of course, I'm just the product of the lowly caste - public education and a mother who stayed at home.

I respect the OP's decision to stick with the current daycare: relationships are all-important and if the kids love their teachers and friends it's worth the $1,200 extra per year to keep them there. I had friends who yanked their kids out of schools and away from friends to move to new jobs and careers, and the kids bore a lot of resentment, did poorly in school, and one of them ended up with serious drug addiction problems. Of course that may have happened anyway, but the kids often confided in me how much they resented being pulled away from their friends. A stable environment means a lot to kids, especially young ones.

I would sacrifice the cars before taking the kids out of an environment they're thriving in.

It's actually an extra $3640-$4680/year.

I tend to agree with this. The tricky thing, however, can be that parents who stretch for the "best" from the start may be setting the kids up to be surrounded by some pretty wealthy Joneses throughout life, thereby perpetuating a series of costly wants and parents stretching to meet them.

If that money is invested in a low cost index fund instead with an average 7% return for the next 30 yrs it would equal an extra $343,837 at retirement. That's using $3640 not $4680.

This is not a terrible idea. Not my first choice but it's probably the lesser of two evils.

voting for the lesser of two evils is still voting for evil.

Wait... that's another topic

My advice is to see what you're willing to sacrifice and go from there. For me it was getting rid of cable completely and my blockbuster dvd by mail thingie.

I am single and I have both a 4x4 truck and a car. I don't know how many times I was told to sell one or the other but the reality is... that the 4x4 comes in handy for hauling stuff and for plowing thru snow (which I did last night on my way home from work) and my car is the daily driver because it gets 30mpg compaired to my 10mpg for the truck. For me I wasn't willing to sacrifice either of the vehicles in the name of debt reduction... they both preform a vital role in my life.

I think the really big key is "decent amount annually, $130k" just doesn't seem to really go as far as one would think, especially with a family of four.

Unfortunately, the options are really

(1) Make more money.
(2) Spend less.

While you search for opportunities to make more money, the more immediate option is to reduce costs. Are there things you are willing to do to reduce your expenses such as carpool, ridesharing, brown bagging lunches, cutting cable, downgrading to fewer channels/slower internet, less expensive cell phone plan? I think one of the real challenges for people in the "middle-income" brackets is mentally discounting potential savings of $20-$50 a month on a particular line-item as "not worth pursuing." However, reducing your monthly recurring items adds up quickly. More importantly, as you adopt a more thrifty mindset, you often find other opportunities to save money.

Duh, I thought those were monthly costs, but they're weekly!

Don't feel bad, I do it all the time.

Just to clear the confusion. I went to nothing but public schools and by no means come from anything close to a silver spoon. Where we live daycare is expensive. This daycare is just a normal daycare, it's not pre-private school. My kids will go to public school just as we did. There are other centers in the area that are also regular daycares at $275/wk. We tried taking my son out when he was younger and tried the in home. It rocked his world. He was upset and lacked a routine. We're getting quite off topic here. I was simply saying I'll drive the ugliest thing on the block if it means they are happy and comfortable where they are. I'm open to trying to pay off my wife's negative equity and I think in trading down we can trim at least $200-250 off the car payment. I just didn't know if that was wise to deplete our savings to do so. Thank you all for your comments and thoughts even if some are a bit off topic...

I have cut to the lowest Internet speed.
I am on the lowest digital directv package. Entertained hd antenna, anyone had success with this?
We only and I mean only get Verizon service where we live but we are open to a prepaid wireless plan that uses the verizon CDMA network, currently researching this...
We brown bag and have made huge strides towards cooking at home every night of the week.
We work different hours in opposite directions so one car really isn't doable.