J-Dawg,
The first thing I would suggest to you is working your way through each of the posts on the Mr. Money Mustache blog from beginning to end. First, it gives enormously helpful advice for changing the way you view spending money. And second, it proves to be incredibly inspirational when you realize that there are things you can do to change your situation.
Let's start with the smaller amounts in your budget:$8 - netflix
$35 - home phone & internet (no tv)
$105 - cell phones - just read the post about the $10 iPhone, anyone else tried that?
$150 - electricity (this is always less, but we budget $150 just in case)
$152 car insurance
$200 - we budget this for things like my hubs work clothes, haircuts, the very rare work lunch that's not from home, etc.
$289 car payment (minivan)
First, I think you're doing a great thing with forgoing TV. One of the first things my wife and I did when we first started reading this blog was to kick out the cable - we save $100 a month from the evil Time Warner people, and we hardly even notice it's gone. I see no problem with you guys spending $43 a month on Netflix and phone/internet.
Now on to the cell phone. I would highly suggest you switch to an MVNO plan. Do your homework and check your current bill to see how many texts and minutes you use each month and find a plan that fits that. For instance, when I made the switch two months ago, I was using about 200 minutes and 100 texts maximum each month - I moved to PagePlus Cellular with my iphone and now pay $12 a month, again saving about $90 a month. I know that doesn't sound like a lot when you in fact have a $128k salary, but it's the accumulation of these little changes that will get you back in the game. Between the cable and phone changes (which took all of a week to make), I'm saving almost $2300 a year.
$150 seems extremely high for electricity. Is this just electric or is it both gas and electric? If it's just electric, you need to make some changes because I pay Con Edison about $45 a month living in Queens. Make sure to turn off lights when you're not using them, unplug appliances when you're not using them, etc.
$200 a month for etc. For this, I think it's important to figure out what you're actually spending it on. How many new "work clothes" is your husband buying? Or does this include dry cleaning costs? If so, investigate alternatives to taking suits to a dry cleaner - there are plenty of cheaper options out there. With regards to the work lunches - he can't expense those to his company? Again, for these occasional expenses, it's about working to find a cheaper route. Can you cut your kids hair yourself? MMM has a post about doing just this with electric clippers.
Now on to the car. I strongly urge you to read this MMM post:
http://www.mrmoneymustache.com/2011/04/19/how-to-come-out-way-ahead-when-buying-a-used-car/. Most of the time, I would be telling you to get out of your current monthly payments IMMEDIATELY and buy a cheap, reliable USED minivan. That is still my advice, but I think one of the big issues in your budget is that despite your $128k salary, you don't even have a one month emergency fund and that's a big problem. If your husband gets injured, has a medical emergency or loses his job, you don't have much to cover you. And more to the point about the car - you don't have enough to buy a used $4k or $5k car in cash. Others should feel free to chime in here with suggestions, but you absolutely need to get out from the dreaded "car payment."
Now on to the big ticket items:$1887 - rent
$1696 - tuition for 2 in pre-k/kindergarten
$1197 - student loans (3 loans - just paid one off early!)
$1000 - groceries including toiletries, diapers, etc, gas/subway
Let's make sure we know what we're dealing with here. One of the keys to achieving financial independence according to this blog is finding a way to save at least half of your take home pay each month. Right now, 80% of your (rather sizable) take home pay is going to these four things - rent, tuition, loans and groceries. These four things need to be addressed.
I'm going to start with the groceries, because that's really the only thing I have any experience with. Not seeing exactly what you're spending your money on here makes it difficult to give you specific advice on how to cut back (also, I see that you put gas and subway in this category too when those should be in a separate transportation category). But there is absolutely no reason why you shouldn't be able to cut this in half. First, with regards to diapers, I will refer you to MMM's post on raising kids affordably and includes information about going cloth:
http://www.mrmoneymustache.com/2011/05/26/what-is-the-real-cost-of-raising-children/. Now, with regards to food, I want you to take a month or two and really understand what you're spending this food money on. Do you go out to eat at the local cafe, do you stop at McDonalds a few times a month for happy meals, are you buying frozen stouffer's meals at the grocery store? If so, I'd strongly urge you to stop for financial and health reasons. Here are two quick ways to cut the costs of your grocery bill AND eat healthy: #1: Join your local CSA and buy a vegetable share. My wife and I belong to ours and we only need a half share (and even then it's almost more than we can eat each week). For this, we pay $400 for six months of vegetables ($66 a month). Years ago, we purchased a chest freezer and started doing a half cow share as well. For this, we pay somewhere in the neighborhood of $50 a month (collectively eat about 3 pounds a week at $4.50 a pound). Now, for a family of six, these costs will obviously increase and you might want to also occasionally buy a fish or a whole chicken at your local farmer's market. Still, your costs for feeding a family of 6 will be dramatically reduced from $1000 a month and I strongly urge you to start knocking away at this.
Student loans at $1200 a month: Student loans are what they are and I think most people who owe them will tell you that taking them on was a huge mistake. As we speak, I'm in the midst of a career change and can't tell you how many people have suggested I go back to school for this or that but I simply won't do it because you can't build your wealth when you're bleeding from the Sally Mae wound each month. The simple advice here is to pay these loans off as soon as possible to keep the interest from hitting you too hard. But to do that, you need to start saving in other areas first. Others who have more hands on experience with having student loans can add on to this advice.
Kids tuition at $1700 a month and rent at $1900 a month: Again, we need to be realistic about this - you are spending about one-quarter of your $128k salary on pre-school and kindergarten tuition for two of your kids. Each person has their own unique situation and nobody can tell you the right thing to do for your own kids - only you can do that. But you need to be honest here and realize that it's going to be very hard to grow your wealth when you are spending 40% of your take home pay on student loans and private school tuition. Does that mean that you should be sending your kids to the local Harlem public school? Of course, not - I'm no expert, but I'm pretty sure that nobody wants to be sending their kids to a public school in Harlem. But this may be where the moving discussion needs to come in. Normally I'd say stop paying rent, buy a home instead and start paying equity into your house, but you're nowhere close to having a down payment. But it does reason that you may be better off finding a better school district close to family and sending your kids to a decent public school. Or else, perhaps this is where the home school discussion comes in, in which case you'll have your hands full each day but you'll basically just pay for supplies and books for your kids and probably save more than $1500 a month (and more than that when you factor in education for your other two kids).
So, that's where I think you are. I concur with others on this thread that it's obviously good to be in a place where you can earn a good income. But it's not good at all if you're not gaining anything from that income. Let's be clear- you are doing incredibly well income-wise. $128k is huge and well more than probably most people on this board pull in. The difference is that the people who are living by the MMM principles are much wealthier than you are despite earning less. Go to your local library and check out "The Millionaire Next Door" which examines how millionaires actually get to be millionaires and how "income" and "wealth" are very different things. Your husband obviously has an in-demand skill set or he wouldn't be making such a good income. I understand that Wall Street is the hub of the financial world and incomes there will be higher than incomes elsewhere. But there are also investment banks all over the country, probably many closer to your family which I have to agree with others, is probably the best case scenario. I think you need to institute some major changes because increased income is only good if it is adding to your wealth and your happiness.
Good luck, and keep posting - we all have questions about our own financial situations and this community is an enormous help.
