Traditionally, the American Dream has included owning a house, and until recently that meant the bigger the better. McMansions have flourished in suburbs across the country, and as houses got bigger we filled them with more stuff. Kerri Fivecoat-Campbell had been subconsciously trying to live up to this American Dream when circumstances forced her and her husband into a 480-square foot house in the woods. What was supposed to be a writing cabin and guest house became their full-time abode and they quickly discovered that they had serendipitously discovered a better way of life.

They realized that by living smaller, they were in fact, living large—they were not spending extra time cleaning and maintaining the house, but had the freedom to pursue their hobbies; they did not waste money on utilities or things they didn't need; they were more environmentally aware; and they grew emotionally (as well as physically) closer. The lightbulb went on when Kerri and her husband...