I try to go through my closet at least once a month to weed out the clothes that I never wear because they are damaged or don't fit or just are not my style anymore. Normally I donate these items to Good Will or bring them to a clothes swap.
Just found a great service, Reknit, that will take your old sweaters and turn them into something else. This month they are "reknitting" sweaters into scarves for only $30.
Thanks to The Zoe Report for promoting this website!