Downsizing to a 1 BR apartment - Married with a toddler

I’m a new member and was hoping for some advice on my situation.

My husband and I moved from Florida to Washington just over 4 years ago. We started off in an affordable, all inclusive 1 BR “mother-in-law” apartment in a suburban outskirt city as we looked for work and started building our life here. It’s attached to a couples home, but is otherwise built like a traditional apartment with its own entrance and all amenities.

Fast forward a couple years, we moved closer to the city and our jobs and got a 2 BR apartment as we started trying for a baby. We got pregnant quickly, and our son is now a year and a half old. We both work and make a reasonable living, but are paycheck to paycheck as we are still playing catch up from debt accumulated when we moved here combined with the high cost of living where we live and childcare. We just found out through the owners of our old rental unit (whom we’ve maintained contact with) that they are trying to find new tenants. My husband and I are tempted to move back for 1-2 years with our son as a means to save money and pay off debt. We calculated it would save us $650 a month, plus our rent is guaranteed to go up next April at our current unit $100-$150 (Making it a $750-$800 savings at that time).

We are hesitant to try to downsize to a 1 BR with a toddler. Our current 2 br apartment is small (875 sf) but it works for the 3 of us. Our old apartment was really nice and we enjoyed living there. It would mean a longer commuter, as well as a change to the dynamic of our childcare. Currently we have a stay at home mother that we love who watches our son with hers in our home. We would want to continue having her watch him, so she would meet us near our jobs for drop off/pickup and watch him at her house. She cares for him 3 days a week.

It’s a huge saving for us that could potentially have us debt free (other than car payment) in a years’ time. Yet we’re still wondering if it’s too big a compromise. Our friend shares a 1 bedroom with her 2 year old and we’ve seen the complications it brings, especially with sleep difficulties (which is something our soon in good with in his own room). Plus, we don’t know what to expect in the next couple years since he is our first child.

Any advice or insight is appreciated.