CALISTOGA, California (CNN) -- Bill and Sharon Kastrinos practice the ultimate in minimalism. They've squeezed into a 154-square-foot home that looks more like a kid's playhouse than their previous 1,800-square-foot home.
The Kastrinos moved into this tiny home from an 1,800-square-foot place.
With the economy crashing, the Kastrinos traded in their spacious kitchen for one that stretches barely an arm's length.
It hasn't been without its challenges, but Sharon Kastrinos says it's exhilarating to no longer feel compelled to keep up with the Joneses. "There's a tremendous burden that's off your shoulders," she says. "Small is OK, and it might even be better."
Her husband adds that most Americans "want to be seen in their big house with a big car." But not them, not anymore.
"I don't think bigger is better," he says.
Bill Kastrinos had been in the construction business in Southern California. But when the real estate market went bust, it forced the couple to reconsider their lifestyle. Watch what life is like in a home the size of a shed »
Now, they live in a place so small, he and his wife use a ladder to climb into their bed every night. The downstairs has a sitting area, tiny kitchen and bathroom in a space that's 98 square feet. The upstairs loft has a bed in 56 square feet of space. They keep extra clothes in their car.
"It's a very simple lifestyle," he says. "The downside of it is it takes a readjustment. You can't have 100 pairs of shoes in the closet or 50 outfits."
The house cost them $15,000, and the utilities are a mere $15 a month. The couple now live on property owned by their daughter in California wine country, where the average home in 2007 cost $725,000. If they want to leave, the home has wheels and can be pulled behind their vehicle and plugged into any RV park in the nation.
The family still has their 1,800-square-foot home, but they will probably sell it. The house is too expensive, they say, costing them about $1,500 a month in mortgage payments, plus another $160 in utilities.
The change to their shed-like home has been so dramatic that Bill Kastrinos is now building the tiny homes to sell. He's sold 11 in six months, most of them in the range of $15,000 to $20,000. Clients range from people on welfare to retirees on fixed income, he says. Inquiries about the homes are on the rise, he adds.
The Kastrinoses might be extreme in their shedding the traditional American dream, but others are trying it too. iReport: Do you live in a small space? Show us how you make it work
In nearby Sebastopol, California, Jay Shafer designs tiny homes and has even started a blog about living on less. His homes have a designer feel -- interior wood paneling, stainless steel kitchens, built-in bookcases -- packed into a space about the size of walk-in closets of upscale homes. His smallest home has 65 square feet; his biggest (a three-bedroom place) has 774 square feet.
"I look around and I do see a lot of people who seem they're slaves to their homes," he says. "I didn't want to pay rent or a mortgage forever. So my plan was to escape the rat race."
Is he trying to make a political statement, or is his new way of life about being practical?
"It's both," he says, his head touching the vaulted ceiling from his bed. "It's a very practical thing for me. If I didn't have a 100-square-foot house, I probably wouldn't be able to afford to live in this county. Aside from that, politically speaking, I like the idea of showing people how little a person could need."
By sizing down, he says he's living on a total of $15,000 a year. He doesn't have to worry about not making a mortgage payment and gets to work a job that he enjoys.
"Living in a small house has allowed me to do what I love doing, which is designing more small houses," he says.
He, too, has purged junk and other items, donating most of it to the Salvation Army and to friends. "It does feel good," he says. "I don't miss the extra books, the extra clothes I never wore."
He's married, but there's not enough space for his spouse in his place. He's designing her a nearby place that's about triple the size of his: 280 square feet.
He admits a tiny house isn't for everybody. But with the economy in a tailspin, he says, he doesn't worry one bit about it, thanks to his newfound lifestyle. It's peace of mind you can't put a price on.
"I don't think I have anything to worry about," he says. "I've made more money, and I can save all of it and still go out to eat."