Ok, I read through this to see what the drama was about. Got it.
I think you’re doing mostly ok. Yeah, you’ve gone a little lifestyle inflation, but not insane. Oddly, I’d keep those swim lessons until both kids can keep themselves afloat if they fall into a pool (particularly if you have a pool). I’d get rid of the school loans as quickly as possible. You’re not getting rid of the van, so just let that one ride. No need to spend up the mortgage. If you’ve maxed your retirement accounts then I’d out the extra money in 529s, HSA (if available) and then Vanguard. Typical investment order stuff.
Mostly, I’d sit with the wife and work out a plan. We’re here and we want to get there, what will we need to do? You’re not dumb or bad people and the money you’ve paid for the child education wasn’t a mistake. Hopefully you all have the info you need to make better decisions about your kid’s education.
Don’t beat yourself up, just make well-thought out, considered decisions, with the singular goal of avoiding all debt, except mortgage, and giving saving and investing as much as you can, while having the happiest, best home and family life possible. Simple ;-)