Well, I guess a coal furnace is the real deal, to get the right temperatures but also to get some carbon into the iron.
To the anvil... if its to small its really hard to work with. And you will need a tree stump in any case - even the pro anvils are put on a stump, simply because they are too low without one. You have to be able to stand upright when you hammer, or your back will kill you soon.
Talking about killing you - do you have neighbours living near by? :)