I bet you have a closet full of stuff that you haven't worn in quite a while (or at all!) but you're still holding onto "just because". Maybe it's something nicer than the usual things you wear but you picked it up because it was awesome or on sale and you were determined to find an opportunity to wear it. Maybe it still has the tags on it or maybe you did get a chance to wear it... once... 3 years ago. "But I might still wear it again!"
Be realistic. If it still has tags on it after 6 months then it needs to go. If you bought it specifically for one event and can't think of when you might need it next then it needs to go. Same goes for stuff that doesn't fit, if it's more than one size too big or small then you should get rid of it, trendy seasonal items, shoes that look awesome but pinch (that means they don't fit!), costume jewelry, anything worn out, ripped or stained.
After having a baby I did a massive closet crackdown. Most of my shoes were now too small and I had things I was hanging onto hoping for a chance to wear or I would miraculously shrink into from BEFORE I even got pregnant! I had tiny purses (haha, no way I can fit anything in those!), sparkly scarves and necklaces (babies like to pull on things, ack! choke!) and high heels and mini dresses (I won't be pushing a stroller wearing those!)
Step 1: Search your area for consignment shops, have a look at the type of items they sell (but don't buy anything!) and see if it's similar to your style. Ask them what season they are accepting now. Ask what the split is, its often 40/60, 40% of the sale price goes to you and 60% goes to them. Other shops offer store credit only. If your items don't sell after 3 months then they go to charity. That's fine with me. If that's okay with you then leave them your name and tell them you will be bringing your stuff in tomorrow.
If you don't think the 40/60 is fair then try your luck with Craigslist and Kijiji but be prepared for lowball offers or your stuff just not selling. You could also try Ebay or if your stuff is more style specific (I had a lot of Gothy/Punk stuff) then Gothauctions.com is a good free auction site.
Step 2: Tear that closet apart! Take everything out and lay it on your bed. Get some plastic bags ready, label each one with where it's going to go: consignment (or Craigslist, etc), goodwill, garbage (or rags).
Step 3: Vacuum in there! It's probably super dusty under your shoe rack/piles of shoe boxes, behind your unused luggage. Your closet will look much better and more organized/full even with less clothes and shoes in there once it's clean.
Clothes: Get nekkid! Seriously, you need to try everything on to see whether it still fits. Raise your arms, bend over, take a short walk around your living space wearing each item. If it bunches, pulls, rides up or itches anywhere then get rid of it! Does anything need a small fix that you can manage such as a button sewed back on or a slightly unraveled seam sewed back up. Make a pile for that stuff as well. If an item checks out then put it back into the closet. If it fits but you can't see yourself wearing it within the next couple of weeks then pick a pile! I ended up with only one pair of pants! Eek!
Shoes: Walk around in each pair of shoes for a few minutes, maybe do a couple things around the house in them. If they pinch then they are too small, if they rub they are most likely too big. Either way they won't be comfortable for any extended period of time if you ever wear them out. Even if they fit will you ever wear them? If you have 8 pairs of heels but spend most of the time in jeans and t-shirts then you probably don't need those heels. Go ahead and keep a pair or two for the rare occasion where you might need them, job interviews, a nice dinner out, a wedding. I recommend having a pair of basic black high heels as well as a flashier pair in red, white, green, purple or whatever color you love. If you have several pairs of running shoes/winter boots it would be a good idea to have a look at those and ditch them if they are worn down unevenly or have any holes. There's nothing worse than when they weather gets bad and you head outside only to discover a few blocks from home that you have a holey running shoe/leaky boot.
Purses: How many teeny evening purses do you have? If you don't go out often then it should probably only be 1 or 2 and should go with the 2 pairs of nice shoes that you kept. Everyday purses? Does it fit all of your stuff? Is it a basic, classic color? Then keep it! I have 4 or 5 but I keep them in rotation and actually use them. None of them sits in my closet for more than a week or two alone.
Accessories: I own a watch, but most of the time I use my cellphone to check the time. I also tend to wear the same jewelry most of the time and when I do change it up it's usually the same couple of dressier things. It's a good idea to get rid of most of your costume jewelry and just keep your favorites.
Other stuff: Do you ever travel? No? Then you don't need that giant suitcase, if you go anywhere then you can probably get by with an overnight bag.
Sports gear: Do you use it regularly if it's in season? If it's nice out and your rollerblades/skateboard/moonboots are collecting dust then sell it. Post it up on Craigslist and let someone that would use and enjoy it get a great deal!
All done! Close up those bags and don't look through them again! Pack up your car/stroller/bike. Take your consignment stuff in first, the salesperson will look through and pick out what they think they can sell, you might be lucky and they will take everything. If they don't then you have more stuff to drop off at Goodwill. If they left some expensive items that you can't bear to give away then bring them home and put them into your Craigslist pile.
Get out your camera and take pictures of everything you have left, post items and descriptions on appropriate sites and wait for sales. Use your cash to pay off bills or fill gaps in your wardrobe with better quality items from the same thrift stores and consignment shops you left your unwanted items at!