Clean the Crap Out of Your Closet
This means that you have to take everything out and try it on and decide whether you are keeping it. Yes, it takes time, but since you are not shopping right now (probably) and you have recovered from the holidays (hopefully), you have both the time and the energy to tackle this.
I have realized, after helping a lot of women clean out their closets, that it is easiest do to so with a friend, a glass of bubbly, and your sense of humor in tact. So find a friend who either loves cleaning closets or is at least very honest and crack open that bottle you've been saving.
I like the following approach, but you might find something that works better for you. Just be ready to spend several hours on this and have several bags ready for your discards.
Pull out every thing you own, either all at once, or peice by peice. You and your closet cleaning companion should decide how you want to determine what to keep and what to toss. My preferred factors are a) Fit, b) Condition, and c) Suitability.
We have discussed this before, and surely we will do so again. Suffice it to say that if it fits, you can get to points b and c; if it does not, you must toss it.
The only exception to this rule is when minor tailoring (hem length, strap adjustment, etc.) can make the item fit. To keep the item, however, you must take to the tailor IMMEDIATELY. Like, tomorrow. Otherwise, it's just taking up valuable space.
(If you are having a hard time parting with something because you think it COULD fit at some point, ask yourself whether you have worn it in the last 3-6 months. One trick I play with myself is to move those items to another closet, out of sight. If, several months later, I haven't even thought about them, then I know I can- and should- get rid of them. More often than not, I don't even remember what I put in that out of the way location, which is a sign that I never needed that stuff in the first place.)
If it's stained or torn, seams are pulling apart, or there are any other signs of disrepair, you must toss it. I know you think that you will one day turn Martha and hand-sew all of your garments back to their original condition. Get over it. Unless there is a very simple repair that will make the item wearable, like replacing a button or repairing a hem, it's not worth it.
This is where most of your justifications to yourself and disagreements with your friend will start.
Suitability means that the items is appropriate for your (actual, not imagined!) life, your personal style, and the current fashion climate.
One woman whose closet I made over was keeping stuff from middle school and high school because the clothes weren't in poor condition and they still fit. But the styles were 10-15 years out of date and didn't work for her business casual office environment or active lifestyle on the weekends.
Another woman had a several prairie skirts and bum-around-the-park tops that she loved for sunny days lazing around the parks in the City. Unfortunately, the clothes did not flatter her, nor did she have a lot of time for lazing around. And jeans or walking shorts would work just as well when she did have time to lounge outside, and would also suit her structural, more modern aesthetic much better.
One of my own closet issues revolves around button down shirts. I buy them, thinking I can make them work with peices I already own, and I can. But what I can't do it get comfortable in them. When they fit my bust, they are huge in the shoulder; when they fit my shoulders, it gaps at the button-closures at the bust. And I don't even like them! They don't make my professional clothes look sharp; I feel stuffy. And they don't make my casual looks polished; I feel like a soccer mom. So they aren't my thing. So even if one fits and is in good condition, I should get rid of it.
After you have been through everything, you can put away the keepers and sort the discards into one pile to give away and one pile to toss entirely. You should also make a plan to deal with anything that needs repair or tailoring.
Along the way, I keep a list of what's missing. Great burgandy cords but no top to go with? Put it on the list. All work clothes and nothing for weekend? On the list. Wear jeans to work everyday (lucky dog!) and only 2 pairs of jeans? List!
All of the above should be done at least once a year. I cull my closet 3-4 times a year, have gotten my methods down to a (somewhat tipsy) science, and each session takes less than 2 hours now. And I have a constantly evolving list so when I shop, I can be focused on something I should get versus getting distracted by all of the delicious sales...