Familyof4,
You asked "what am I doing wrong". You aren't doing anything most of America has been doing. You borrowed for things you wanted that you couldn't afford at the time. BUT, that was yesterday. You seem to have made some changes and it appears you are on the right track. It looks like you have organized things well.
By the way, one post said to pay off the 401K loan because it comes due immediately if you lose your job, but that is not necessarily the case. I used to own a pension administration company that I sold in 2006. Most likely, there is an option to continue paying on the loan if your balance is more than $5000 in your account.
Saving for the next car is huge, but after you buy that car, you need to keep putting money into a car fund for your next car. Essentially, you should always be paying into a car fund as you will have repairs and/or you will need to alway buy cars.
You really don't have a lot in savings, so I would focus on that while you are also paying down debts. I would recommend you come up with a "spending plan". This just formalizes where your money is going to go. Try to structure the plan so that all your debts (except mortage) is paid off within 4 years.
Never again buy anything on debt unless it can return you more money than you are paying in interest. Pay cash for discretionary expenses. If you don't have the cash, you can't afford it. This means cars too.
You have about $46,000 of discretionary debt (I'm assuming the home equity loan was taken out to buy something discretionary). That is close to one times your annual take home pay. That's a lot of debt proportionately.
I would NOT take out another home equity loan. While it can easily be argued that financially it would make sense because the interest is deductible. I've learned you need to change the behaviors that got you in this position before doing any loan consolidations. I've said this in other posts, but most people will go right back to borrowing on credit cards, etc. within 12 months of a loan consolidation. Change your behaviors for a couple of years first, then you can make the consolidation loans if necessary.
Hope that helps!
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