He does not have a 401K through them (and doesn't have one at all), so I was thinking about him opening a Roth IRA and start contributing to that.
If his work doesn't have a 401(k) at all, he should be eligible for a Traditional IRA deduction (max $5,000 for 2012 and you can contribute up until April 15th of this year / before you file your taxes and $5,500 for 2013), unless your household Adjusted Gross Income is over $178,000. See this table:
http://www.irs.gov/Retirement-Plans/2013-IRA-Deduction-Limits-Effect-of-Modified-AGI-on-Deduction-if-You-Are-NOT-Covered-by-a-Retirement-Plan-at-WorkIf you don't meet that requirement, a Roth IRA is a good option too.
Note that the boundary is $95,000 if you have a 401(k) at work:
http://www.irs.gov/Retirement-Plans/2013-IRA-Deduction-Limits-Effect-of-Modified-AGI-on-Deduction-if-You-Are-Covered-by-a-Retirement-Plan-at-Work So you may be able to use a Traditional IRA for both of you, depending on what your income level is.
We want to start investing and I just read the blog about VTSAX and am really thinking about that! We will have to save up the $10K over the next several months, but I think its' a good option for long term investing.
You don't need to save up the $10k and do it all at once - you can do it in any increment you want. Also, each of you would have your own accounts of each of the following types: Traditional IRA, Roth IRA, 401(k). Have you put any money into IRAs for 2012? If you have the funds to do so before April 15th, I would mark your contributions against the 2012 tax year, rather than 2013.
The suggestion of Betterment isn't bad. Vanguard's target retirement date funds, e.g. for 2050
https://personal.vanguard.com/us/funds/snapshot?FundId=0699&FundIntExt=INT are great as well and have lower expenses than Betterment. What I would do if you want to go that route is to save up $1,000 for one of you, open an IRA into the 2050 (or whichever date you choose) target retirement date fund. Then save up another $1,000 for the other one of you and fund that IRA account. Poof, you can then put in $100 increments into either of your IRA accounts :) You can set it up on automatic transfer, on paycheck direct deposit (my favourite option!), or do so manually.
Auto gas $200
You're spending $200/month on gas? How much do you drive and what kind of fuel consumption do your cars get?
Grocery & Household $700 (This is mostly organic foods. We eat a fairly primal diet. Also includes cat food and litter. We do not use paper towels, or commercial cleaners. I use vinegar to clean. I make my own soap. We use Soap Nuts for the laundry.)
This is the only thing that seems high to me, but I don't know where you live and cat food and litter could possibly also be expensive.
What have I left out? Anywhere we can improve? What should we do with the $1K/mo? We will have about a 6 month E-Fund set aside in case of a lay off (my husband has actually been laid off twice. The longest was 3 months.)
Do you plan on buying a house at some point or continuing to rent from your in-laws? Both are good options, but they do affect what you do with your ~$1k/month.
I would consider using your ~$1k/month to open IRAs for the both of you, marking the contributions for 2012 if possible. You could possibly get $1k in each of your IRAs before the April 15th deadline depending on when this $1k/month appears. Then set up automatic contributions of $500/month to each of your IRAs to cover the 2013 contribution room.
What do the funds look like in your 401(k)? If those are good, I would also consider putting some more money in there since it's pre-tax immediately (you don't get the IRA deduction until you file your tax return) and it's automatic off your paycheck.