I want to start with some answers to questions left in my comments
Do you limit the kids clothing? For example, only so many shirts, pants, etc?
Yes. There is not set number. My oldest usually has about 5shirts, and 4 pants, my middle son has more beause he can get messy like no one else I know, and the baby actually only has about 5 sleepers and 5 dresses in the size she is in now (I'd like more for her but she outgrows them faster than I can buy outfits I like!).
How do you decide what to keep if you do?
We just dont buy much. I do laundry daily, so we always have something to wear anyhow. I try to choose only classic items, my oldest wears 99% button up shirts by his own choice, my younger has t shirts but with no characters or logos for the most part. Pants are jeans or khaki.
If there is an accident in bed, how do you handle only having one set of sheets?
We just lay a blanket over the mattress, toss the sheets in the wash and go back to bed. Or use a sleeping bag on the floor.
Now that you have the 3rd, does she have her own room
No, we co-sleep for the first year, I have NO IDEA what we'll do with her after that! I'm praying God will bring us an answer. I'm hoping that our house in California will sell so we can buy a home here.
and what did you do with the toys and school stuff?
That brings us to Part 2!
Our second bedroom is the play/school room. (The 3rd being the master, I'm not sure if I'll go there with this series)
We started this room so that Andrew (As a toddler) had a place to play while I homeschooled Peter. It worked out well. I admit we don't always do our schoolwork in here, so we have a large basket with handles that holds all the books we use on a daily basis and we can move that to the kitchen, living room, bedroom etc, and then set it back in the playroom on the table when we finish.
I do strongly limit toys. I want my boys to grow up with creativity, not depending on "stuff" for their happiness. Plus, I don't have patience for clutter or messes. I teach my children from a very young age that they must pick up after they take something out. I still have to remind them regularly but they do a pretty good job. And any time we start battling messes it is the first sign to me we have accumulated too many toys. I'm always open with my children in why we don't need a ton of toys. I let them choose first which ones to get rid of and if they don't pick enough I start choosing.

We have an entertainment center from Walmart. I painted the doors with chalkboard chalk thinking we'd use it for school. We dont, but Andrew likes to draw on it.

I try to choose toys that the children will learn from. We have Legos (red bin) ,the blue box is filled with REAL tools they can use and build with rather that toy tools. Abigail has some
adorable cotton food for when she gets older in the basket, the blue hamper is filled with dress up ( knight costumes, a cowboy hat, a sheriff badge, wooden swords and an old fashioned wooden gun, a raccoon hat, etc). The small basket has puzzles, and the wooden boxes (that the boys made) are filled with tiny ship and space ship models. The bottom drawer has
Klutz building cards (we have castle, pirate ships and spaceships) and the top is Peter's origami collection. The purple bin has our
Cranium SuperFort We also have more in the colorful bins under the window. Andrew loves his action figures and matchbox cars, and their star wars and transformers. Honestly these are toys I'd happily live with out but Daddy lets them have them. We balance each other out well :)
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We have a "code" in our house for making sure the floor is clean. In the morning I tell the boys "vacuum ready" and they know that means to search the house for anything small (stray legos etc) or any toy/blanket/item they may have left on the floor so I can run the vacuum through the house (I am obsessive about my
vacuum, I use it constantly).
To me as long as the house is neat and orderly I am happy. I am not as obsessive about scrubbing/mopping etc. We have some dust. Its just messes, and clutter that make me crazy!