How do you organize when you are in a small space?

Organizing is not my top quality but I know I dislike clutter as well as my husband.  I just got home from a mommy book study and we were talking about keeping our homes better organized so when our hubby's come home they do not have stress at home from a mess or from clutter.  I know my husband would be blessed if I was better at doing some organization and if everything had a place in the house, or apartment.  I have heard him say a few times in the last month, "why is everything on the chair, I can't find a place to sit."  I feel terrible since I randomly lay things on the furniture rather then finding a correct spot for it.

We live in a 2 bedroom apartment with 4 people so we might need to get rid of more things to make this a clutter free zone.  Last year we purchased a book shelf with several cubby storage areas.  It is not the biggest but it works for the time.  I remember when I worked in the schools and the classrooms would have these awesome storage cubbies.  I wish I had space for an awesome storage unit like the ones I saw in the classrooms.  If I had a new storage area I know my little closet of crafts and preschool supplies would be better organized and I could quickly get the items I needed rather then taking half the things out to get the one thing I needed.

So I am curious how do you stay organized?  Do you have place for everything?  I think today I am going to go through some of our things and take a bag full to a donation center.   I am going to make a good effort to de-clutter and to have a little more peace at home.