Maren Løgavlen Engh and Max Jallifier used to own four pizza cutters. Now, they have only one.

The Bay Area couple once had a cupboard overstuffed with a dozen mismatched mugs. Now, they have four mugs.

When you move into a 162-square-foot home, stuff gets pared down.

In November, Engh, 24, and Jallifier, 24, said goodbye to their San Francisco one-bedroom apartment and settled into a house the size of walk-in closet or a garden shed. They sold all their furniture on CraigsList and donated 10 garbage bags full of clothing, shoes, dishes, and items they hadn't worn, used or looked at in months, years, ever.

"We really don't even make pizza," Engh said. "We certainly didn't need four pizza cutters."

But Engh and Jallifier didn't move into a small space because they wanted to tidy up their lives. They did it because they couldn't afford to buy a home in San Francisco—and living a more simplified, less cluttered life has just been one of the many benefits of tiny house living.

Engh and Jallifier are part of a small but growing group of tiny house dwellers who care about economy, simplicity, the environment and energy efficiency. Type "tiny house" into Google and you'll find dozens of blogs, books and classes. A company called Tumbleweed with an office in Sonoma, Calif., can sell you a tiny house or set you up with a course to build one yourself. A small house guru named Jay Shafer is planning to build a community of little cottages in Sebastopol, Calif.; another expert named Ethan Waldman is selling a book titled Tiny House Decisions.

The houses are popping up everywhere from tony Montecito, Calif., to remote mountain ranges in the Southern United States. Prices to build these cute cottages with multipurpose living spaces range from $30,000, to $100,000 and up for tricked-out accommodations.

Engh and Jallifier's journey began last year when they were paying $3,000, and then $3,500 after a sudden rent increase, for a one-bedroom and parking in the Glasdore Lofts around the corner from Twitter in the SOMA district. They hated wasting money on rent and dreamed of owning their own place, but the numbers just weren't adding up.

"I started looking at real estate prices, trying to figure out what sort of loan we'd qualify for," Jallifier, who works as a strategic alliance manager at Moxtra in Cupertino, said. "We didn't qualify for any low-income anything because we both work for tech companies, but we don't make enough to actually take out a loan to buy anything. Basically, we couldn't afford to buy a home of any sort in San Francisco."

A lightbulb went off when they began watching shows on HGTV about people who were living debt-free by building a tiny home.

"It started with, 'This is cool,'" said Engh, who works as a training manager at Revinate in S.F. "And then, we were like, 'Wow we could do this.' And then it switched to 'Yes, let's do this.'"

They became a team dedicated to researching tiny homes and watching as much HGTV as possible to collect ideas. They connected with a builder in Canada who started a company called, Tiny Living Homes, and they decided to have him build a fully custom abode on wheels.

"We strategically built our home in Canada because right now the Canadian dollar is significantly less than the dollar in the U.S.," Jallifier explained. "That enabled us to do more custom things than we could have afforded in the U.S."

Fourteen weeks later they were the proud owners of a miniature version of a home you'd expect to find in the pages of a shelter magazine such as Elle Decor or Architectural Digest.

The walls of their home that's now parked in the Santa Cruz Mountains outside La Honda are paneled in white-washed knotty pine and dark wood accents bring contrast and a rustic, yet sophisticated look. The kitchen is equipped with full-size stainless appliances and a double farm sink. The bathroom is luxurious with a shower that's the same size as the one the couple had in their apartment. The loft adds extra square footage, and accommodates a king-size mattress and a Moroccan-style lounge area filled with pillows and carpets.

Clever built-ins make smart use of the space: the loft stairs provide storage, the bar eating area in front of a large window collapses, and a comfy bench converts into a desk.

The total cost for the home was about $80,000, and they paid an extra $15,000 for solar panels that allow them to live off the grid. Covering their costs required taking out a five-year loan. "It's basically like a car loan," Jallifier said.

Moving in last November, Engh and Jallifier are new to tiny house living and only have good things to say about it.

"I don't feel like we've given anything up," Engh said. "We've only gained."

They've hosted some friends and say there's plenty of seating for everyone and they're looking forward to summer when they'll build a deck and can hold larger gatherings.

At this point, they can only imagine life in their tiny house.

"I think we'll live in this home as long as humanly possible," Jallifier said. "I don't see an immediate ending. It's all kind of sort of the grand plan and it's enabling us to save money. We could buy a piece of property. Since the house is on wheels, it's easy to move. There's a lot of opportunity with not being fixed to one place."