The trick is to purge everything from your closet that you are not actually wearing on a regular basis. Here is an easy way to figure that out: Turn all of your hangers around so that the hook is facing you. When you wear the item, turn the hanger around so that the curved part faces you. If you have any hooks pointing toward you after six months, you’re not wearing those items and they should be removed from your closet. This works just as well with sweaters and other things that are stacked on shelves or in drawers, just turn them opposite you to start, and put them back with the fold facing you and you’ll see what you really wear. Although: If you store seasonal items with all of the rest of your clothes, they are exempt from the purge as it’s likely that these won’t make the six month cut-off.
Once you've culled out everything that doesn't make the cut, decide whether you want to sell (consignment is going great guns right now), toss, or give away the items. A few of my favorite ways to do the last: