francie yuhas and Nammie to 7 have excellent ideas for your move. We're getting ready to downsize after over 20 years here. We've barely begun to de-clutter but that has to be done first as Nammie said. Another suggestion: if you have sentimental items you don't have room for take pictures, get rid of the items but you'll always have the pictures for memories. If you can get a layout of the new place you can better visualize where furniture, etc will go.
Is it possible to find a place a bit bigger than 1000 sq ft? As a sewer/quilter you'll want as much space as you can get for that.
Good luck in your journey ahead.