Why in the free world are you paying $50 a month for a gym membership? Run around the block, do some pushes/situps at home, and pocket that $600 you are basically throwing away. Your car payment is also insane. For the kind of money you had best be driving something really nice. I'd also say life insurance is a luxury item, especially for $50 a month. I'd drop that too.
I'd recommend not having anymore kids as well!Make a budget.
I don't have any experience over this (too young), but I remember my stepmother spending all my dads hard earned cash and driving us into bankruptcy, even though we lived on 5 acres of property, had 4 cars, and a quite large swimming pool. It took a very long time, but my father did eventually recover from those days and now has quite good credit. However...your situation is really not that bad. You barely make less money than I do, and I work full time. If you add in your wifes money you probably make more.
You need to cutdown on expenses. Do you drink/smoke? Stop. Don't eat out (this one is super important, youd be surprised how much money people blow in fast food every month). Research recipes for spagetti; pound for pound thats one of the cheapest things to eat. Drink Kool-aid (or Flavor-aid, the off brand) instead of soda. Rexamine your cell phone bill and see if you can cut back on it. Buy generic EVERYTHING. Buy in bulk when you can. Barter where you can ( I'll fix your computer if you fix my car, etc.) Ride a bike to nearby locations instead of driving.
I have found hitting up grocery stores in the late evening is a great way to score some really cheap bread/muffins. One time I got a whole bucket of fried chicken for like $3.
If you have kids old enough: educate them about what is going on. Watching my dad go through bankruptcy really helped me out in life. I still follow almost all these tips. Let your kids learn from your mistakes.
When you do get back on track (and you will), keep the good habits you've learned. My uncle is a VP for a large bank in America, and he still buys off brand laundry detergent. Budgeting well knows no price limit.
EDIT: Actually read the thread and added in some stuff.