While I agree with the majority of the suggestions people have offered, I'm curious how many of you are:
1) In med school
2) Have children
The point I'm trying to make is that some of your suggestions, i.e., having only one car, spouse getting a full- or part-time job would work only under pretty restrictive circumstances.
I had a 6-week old newborn when we moved cross-country to start medical school. We had some savings entering med school, so aside from about $30k in combined undergraduate loans, we had no other outstanding debt.
After the first year, our savings quickly dwindled, so we decided that my wife would work full-time and we'd place our child in daycare.
Daycare where we lived was $900/mo for one child. High-paying jobs weren't plentiful, but my wife was able to find a medical billing job that paid $28K/yr, which covered daycare and also provided cheaper and better health insurance for the family than either paying out of pocket or crappy school insurance. But, quite honestly, after that, there was very little money over and above that. Work clothes for an office setting, gas for work commuting - it adds up.
After my child's *fifth* middle ear infection in the space of a year from exposure to other kids in daycare, we reevaluated the time off work my wife had to take to care for our child, the relatively small amount of money my wife made, and decided it wasn't worth it, and took out additional loans.
We owned both our cars, and only had to pay for insurance. But we had two station wagons and only one kid at the time. Having three would almost necessitate us getting a large(r) station wagon or minivan. That would cost.
Certain aspects of the OP's budget seem off. But I also think the OP didn't do a great job of detailing his budget. That car note and insurance - is that for one car or two? I can't see you guys without two cars, and my guess is that you have a beater car for yourself, and a minivan for the fam. I'm guessing the car note is for the van, and the insurance covers both. If so, it's not an unreasonable cost.
$2k/mo for gas and food seem a tad high, but I don't know if it's mac and cheese or steak every night, or whether that includes eating out.
$2400/yr for two cell phones is really high. We have two cell phones, no home phone, and pay $70/mo. The family share plan make sure that the people we call the most - each other, don't count towards our minutes.
Utilities vary by location, but whatever you can to do reduce this would be good as well.
I'm quite surprised that your rent is as low as it is. We lived in Socal in the 3BR rental and paid $1400/mo - and that was considered cheap.
OP, I think that you can reduce your budget by several thousand by making some hard choices. Quite honestly, it will involve a standard of living lower than what you currently enjoy - however high or low that currently is.
You need to sit down and hammer out a realistic budget. $90k/yr in loans is not realistic.
You need to sit down with your wife and really discuss whether you can afford to go through medical school - not just financially, but emotionally.
Contributors - all good ideas, but some of them won't work practically. But I think we all agree that a total loan of a half million is nuts.
