How Do You Sort and Part?

We have a problem in our house. It's called "too much stuff". It accumulates and just hangs around.

I know we're fun people and our house is a welcoming place, but really?! Can't the stuff just go?

What kind of stuff, you ask?
Lots of stuff. Let's see, there's clothes that are outgrown. Along with the regular shorts and pants (or shorts) come sock and shoes and underwear and pajamas and swim suits and jackets and hats and belts. Then, there are games that are no longer played. Books that are no longer read. Decorations no longer in style. Really...the list is extensive.
So, to tackle my "too much stuff" in the area of clothing, I decided to listen to the advice of a friend. She said to organize it and label everything and then cover it up and work on it in small increments of time. This was after I said it was just too overwhelming to even start.
So, I took her advice.
Then, the covered up pile sat in my living room until it was absolutely necessary that it be moved--company! Now, it resides in labeled bins under one of my girls' beds. Bit by bit I'm getting rid of it (I hope!).

How do you handle outgrown clothes? What about the "special" ones? Shoes? Old accessories and decorations? Appliances you don't use any longer? Do you have a system?