First: you can do this. You will need patience and commitment, though. It took you many years to get you into your current situation, and so you should presume that it will take several years to turn around the bad stuff. There are no such things as quick fixes.
The good news is that every expense you can cut, every penny you save, provides a double benefit: lower expenses mean you need less to be able to retire, and also leave you more money to save with. For an illustration, see this MMM post:
https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/. The kicker is that the reverse is also true: every extra penny you spend increases the amount you need for retirement by a quarter, and it also leaves you fewer pennies to save toward that goal.
That's why the first thing you need to do is get a handle on what you are actually spending. You know the First Rule of Holes? When you're in one, stop digging. But you can't really do that until you know exactly how big your shovel is. Start tracking every penny -- you don't even need to do anything with it yet, you just need to develop accurate data to base your decisions on. I used to do this just by carrying a little notebook around, or there are apps you can use, or the notes page on your phone, or whatever. Just find some method that works for you.
While you are doing that, you can also take the time to evaluate and try to fix issues that are driving you to spend more than you need to. For ex., the poverty trauma: this is a real thing, and it can create negative habits that last a long time -- and it's often not something you can fix on your own. Consider helping your DH get into some therapy, or go to couples financial counseling, or find some other way to learn ways to manage those sorts of fears.
Also read MMM, particularly about stoicism and optimism and needs vs. wants. We are very, very good at rationalizing and justifying spending money we don't have on things we don't need -- and one of the most common ways of doing that is to justify things as a "need" when they're really not. You know what is a need? A roof over your head, food in your belly, heat in winter, physical and emotional safety, and a way to bring in the money to provide the above.
You know what is not a need? A brand new car with a $550/mo. payment and $280/mo. insurance. Yes, you need transportation to your job and to get groceries and the like. But you didn't need a new vehicle unless your prior vehicle was a motorcycle or literally did not fit a carseat -- and even then, you didn't need a
new car that is costing you over $800/mo.!! You chose that particular solution to your problem because you wanted it -- you used a legitimate need to justify a specific choice that you wanted.
I'm not saying this as criticism, btw. Every single one of us buys more than we actually need every single day. I am just a big, huge fan of acknowledging that for what it is, vs. trying to bullshit myself that I really need this fancy lifestyle. That is where the stoicism bit fits in, btw: it reminds you of how little you actually need to live a good life and be happy. And that makes you conscious of all of the luxury surrounding you, which in turn makes you happy
and reveals areas where you're paying for luxury that isn't actually making you as happy as you thought it would. How different would you feel now if you had, say, a $300 car/insurance tab instead? If you'd gone into the car shopping thinking "how little can I spend to find a safe, reliable vehicle that fits my kids?" instead of "I really need a new car for the kids," you might have hit that $300 mark -- and you might not even be noticing the difference in your daily life.
Small example of how you can make this work in your daily life: say you go to the grocery store and buy a package of strawberries for $9, because it's February and cold outside and they're bright red and look delicious. Most people think along the lines of "strawberries are healthy, my family needs healthy foods, nothing is in season, so I really don't have any choice but to spend $9 to keep my family healthy."
What you should be thinking: "My family needs healthy foods. But I can get just as much health benefit from frozen berries, or some other kind of fruit that costs less. I don't actually need to spend that $9. But boy, I am craving some fresh, ripe fruit right about now, so I am going to splurge and treat myself to those, because they look delicious."
Guess which person tends to be happier in the long run? If your anchor your expectations to your actual needs, you know you only actually need to spend maybe $2 on frozen fruit to be plenty healthy. That's totally affordable. And then, if you buy the fresh berries anyway, you are consciously treating yourself to a splurge, because you can afford to -- and being able to splurge on things they really want tends to make people happy.
Sorry for that big long frolic and detour -- the way people talk to themselves is a big deal to me, and forcing yourself to be straight with yourself can bring a huge (and necessary) change in perspective. Just remember you don't need to do it all at once. Start with the tracking and the therapy and the reading, work on how you guys talk about wants vs. needs, and that will lead you to the next step and the next and the next. Good luck!