This annoying ass door may look latched, but it isn't. That's not very fun.
Proper safety eyewear is a MUST for this task. Your face will be very close to some very fast-moving wood fragments. Bonus points for picking something with a little hipster pizazz.
The culprit. In this case, it wasn't installed correctly and needs to be a little more recessed.
Unscrew and remove that pesky strike plate.
Whoops! Looks like the original installer screwed up, and was hiding an extra hole! Anyway, let's remove some material.
Use your sandpaper bit to remove a lot of excess frame material, and the cutter bit (shown here) for detail work. SAFETY NOTICE: your sandpaper bit can easily burn the wood! Keep it cool, yo.
Once you've removed enough material to get the latch to line up how you like it, screw the plate back in.
Nice! The door should now latch effortlessly and feel totally secure. The door shouldn't wobble, but if it does (and you don't feel like repositioning the plate) I like to stick on some felt.
Boom. This door is closed, son!