Hardly a serious life decision. Seems your fiance has a genuine resonable plan. No 3 year old child is going to be affected by moving into a smaller home. You're overreacting.
It sounds like a very reasonable plan. It means that you can save up enough money for a down payment on a house.
Children do not need a lot of room. Why do you think it will affect your daughter? What would happen if living in a small apartment was not a choice? It sounds like YOU do not want to make the sacrifice and are blaming it on your daughter.
Good plan. Whats wrong with it? Why would a toddler be affected by a smaller house? Odd reasoning. As long as she has her own bed, go for it.
Change is always scary. Congrats on the new job. Work hard and everything will be fine. I've heard some really dumb ideas, and this is definitely not even close to them.
You 3 year old won't care. Sounds like you will though.
As long as your child has a decent place to sleep go for it.