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After reading a lot of the posts I just wanted to give a thanks to all the replies. I think the most helpful part is that I need to relax - and thank you to everyone who pointed this out. You're right. It's not the end of the world, I do realize this, it's just a scary change.
To answer a few questions.
There is indeed no real issue. Like I said, I'll be fine - the simple life is just... really expensive. I understand why so many put off having families until late 30's, if not indefinitely. A rant was the primary purpose of the post - sorry for subjecting you to this.
Take-home (after retirement/taxes/insurance) is about 3k a month for me alone (wife adds about 1.6k - that's going away for a while).
We do decent right now - save a ton (we have two 6 month emergency funds, one in a MM and one in ETFs) and have plenty to spare at the end of every month. The issue is her leaving work for a yet-to-be-determined length of time (likely less than a year but more than 6 months).
I did not factor in tax savings of 1 income for family of 3 vs 2 incomes for family of 2. Take home should increase mildly. This will be offset by needing to cover wife and kid's insurance premiums (wife pays own through work currently, with a good discount).
P&I is indeed less than 1k, by a few bucks. Taxes/ins adds a few hundred a month. Total with escrow is ~$1200.
There really don't exist houses cheaper than where I bought in Salt Lake metro unless you want a very long commute (1 hour+), something that'll eat a lot in repairs or something in a pretty bad part of town - as mentioned before we're already in what many would consider an undesirable part of town, but at least crime is fairly low here.
I do not wish to rent to save $200/mo. - rent for a 2BR apt in my part of town would be about $1000. Nicer parts would run $1500+. "Rough" parts of town or exurbs, maybe $750.
I do not wish to decrease retirement contribution. I won't borrow from my 60 year old self.
After all necessary costs (food, medical, utilities, car ins/gas, minor repairs and maintenance) and some unnecessary (internet, 2 smart phones, reasonable date nights) we'll have about $3-500 left over every month. That will certainly be eaten by unforeseen expenses most months, but again - we'll be okay, just tight. And these are really pretty good circumstances for most my age.
I guess my point was just even with an income above median and a fairly inexpensive lifestyle we'll barely run black each month (eh.. most months..) How does the typical American young adult afford a family? I like to think I do reasonably well with finances, and it'll be tight for me. So how do ones in less ideal situations do it? That's a bleak picture to me.
To tell you the truth, you and your wife are making only $4.6k a month and that is the problem. You need to find a way to increase your Gross Income. $4.6K for a household of 3 is poverty level. You have the right mindset, now you need to cash in from it.
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