I'm assuming the picture is of the 2yo's bedroom space and that you have a separate bedroom. My suggestion is that you have the baby in the room with you for about a year. Then move the (now) 2yo into the bedroom with the baby and make it a shared bedroom/playroom. Put your bed in the alcove where the crib is pictured now.

This is going to be a challenge, but on the bright side it looks like your small condo is very attractive!

Angie's List?

i love that you are a happy, expanding family regardless of your surroundings! my ideas are an ikea kids kura bed turned around bunk bed style. still low enough for your ceilings but gives you added space for using underneath. you could then put a crib underneath in an "L" shape so that half of it is under the bed and half is uncovered. or store all the toys there, whatever. and i agree with the first comment, put your bed in the alcove, a cozy moroccan hideaway, and move the kids to a shared space (when baby is a bit older.) i have seen a few of these kura beds quite cheap on craigslist.

Sorry, no actual resources other than an interior designer or maybe even professional organizer. I assume you are upside down due to the housing market? But have you looked into renting out your condo and renting a larger space? If you could charge enough rent to cover your mortgage it might work. Just an idea.

use vertical space and multipurpose furniture wherever you can! maybe have an ikea consultant come take a look at your space. it'll be a stretch, but totally doable. good luck!

Did you see the post where a family in similarly small digs turned their dinette into a nursery? If you have a dining space, it might be best used as a spot for the wee ones: http://www.apartmenttherapy.com/turning-a-dinette-into-a-nursette-166975?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+apartmenttherapy%2Fohdeedoh+%28AT+Channel%3A+Family%29&utm_content=Google+Reader

I was just at Ikea today and was thinking of this exact post. I would suggest just taking a walk through Ikea to start with - there are a lot of ideas just in those mocked up rooms. I would also suggest going vertical and using multipurpose furniture as much as possible. We have two kids in an apartment and what we've had to do to survive comfortably is to 1) Make incredibly efficient use of closets 2) purge all adult stuff that we don't really use as much as possible 3) purge regularly and accept the fact that if we someday have another kid we'll have to re-buy some stuff 4) "hide" toys in the living space. I have an expedit with those cheap black bins masquerading as our entertainment center. It holds most of our kids' toys but you'd never know it if you didn't live here. 5) get lots of fresh air and find reasons to leave the house every day so you don't get too claustophobic or stir-crazy 6) accept the fact that your kids are going to have to figure out how to deal with less-than-ideal surroundings in terms of sleeping in total quiet.
In the end, we love our small space and have talked ourselves out of moving a few times mostly due to the fact that we like our urban area and can handle living with less. Our boys are very good friends and I think part of this has to do with their close proximity.
It's a tough situation but you can do it - and with your head held high!

Ok. You have to think Japanese. That is use bed rooms as just that "somewhere to sleep". Bed rooms don't have to be filled with stuff just a bed. this would enable you to make the bedrooms smaller thus freeing up space for living space. As your children get older they could move into bunk beds. If you actually look at all your belonging you will realise that most of its necessary. Download sketchup from google "its free" its a great design program and it will allow you to play around with the space without costing you a penny. HM

You can do this. Pick up the AT small cool spaces book and you'll have a spare room to sublet before you're done using all their ideas! Start thinking cubicly instead of 2 dimensionally and find a handyperson to help with some efficient built ins for the kids' space. Get a sofa sleeper. Hang your dining room table and chairs on the wall. Celebrate your outdoor time and your financial liberty by living within your means. You'll be fine. Well done.

http://www.flyingbeds.com/14.SmartBeds/Twirly/index.htm

have you seen this? i would want someone who knows what they're doing to make sure the crib is nice and secure - but other than being a tad scary it's great! bummer on the bad, bad housing market, but living in a small place has so many upsides, including less to clean, needing less furniture, and just generally having less meaningless stuff and more meaningful stuff. http://ohhappyday.com/2011/02/moses-and-romans-closet-part-iii/

You have received so many great tips.I also recommend Apartment Therapy Big Book of Small, Cool Spaces. I also recommend Clutter's Last Stand by Don Aslett. Kids don't need as much clothing as most folks thing because they out grow it so fast. The same goes for toys and books. We have 5 kids books, the remainder we sign out of the library. All the toys, fit in a 3 foot high, 12 inch wide, 11 deep bookcase with room left over. We talk sing songs, dance, draw and arranges artwork on the refrigerator. She "helps' with housework and is never bored.

The good thing about kids sharing a bedroom is that they won't wake you up when they have nightmares. They are also less likely to want to sleep with mom and dad to feel safe when they have a sibling sleeping in the same room with them. You could do twin beds with built in drawers and a bookcase headboard. If they are of the same gender you could do a full size captain's bed with built in drawers underneath, three on each side, and a bookcase headboard. This would provide storage in a compact design eliminating the need for a dresser, nightstand and box spring.

The grownups could also have a queen size Captain's bed version with a bookcase headboard and two lamps. This would make the bedroom feel less cluttered with much easier to maneuver and clean.

In the living room you might want to consider a large, tall wall unit with lots of closed storage to concentrate things that you need and want to keep. Also if you still have room a long low sideboard or a desk. A large area rug, a comfortable couch, a side chair and one or two nightstand with lamps to function as side tables. In the kitchen all you need is a kitchen table, chairs, a booster seat and a high chair.

I recommend a purge of what you aren't using, starting with clothing, shoes, books, accessories, cooking gadgets, gifts you never liked anyway and furniture.