We've now officially lived in our small apartment for about 8 months. Initially, 550 square feet sounded like it would be rough, but it hasn't been all that bad. Granted, I do miss some things like having two bathrooms and a dishwasher. Having a bigger kitchen would be nice considering how much cooking we do, but our current small kitchen is workable. Also, there's not a whole lot of private, quiet space in the apartment. Talking on the phone on one side of the apartment is clearly audible on the other side of the apartment.
So, if there are those downsides about the apartment, what are the upsides? Well, location for starters. We can walk basically everywhere we need to go. Trader Joe's: 10 minute walk, even while laden with groceries. Train station: less than 10 minutes, 6 minutes at a brisk pace. Gym: roughly 10 minutes. Hardware store: 4 minutes. Barber shop: 4 minutes. Several parks: less than 10 minutes away. A bevy of restaurants are all minutes away by foot, even though we actually almost never eat out. Whole Foods is also technically a walkable distance, but it's just far enough that driving a car there makes sense.
Cheaper rent and utilities is also a big plus. Rent is about 30% cheaper than the larger apartment alternative we were considering, and we also get free heat and water. We have had to be creative with organizing stuff, but the flip side to that is that I've been forced to get rid of stuff. When you don't have space to store crap, you start focusing on the stuff that you actually need or has real importance. Oh, and cleanup (when we manage to get around to doing it) doesn't take nearly as long as it would with a bigger space. It takes longer to setup the vacuum cleaner than it does to actually vacuum the floor (ok, that's a bit of an exaggeration, but it's not far from the truth).
I know a lot of people (many of my friends included) think we're a bit nuts for intentionally choosing to live in such a small apartment. I don't think it's so bad. People do actually live in even smaller spaces than we do. Personally, I hope things start trending towards smaller houses, better built houses, and smarter community layouts. I think it would go a long way to helping people prioritize the important things in life rather than the focusing on the material side of things and keeping up with the Joneses.