unfit to donate

I hate throwing things away.  One of my favorite things about the town where we live right now is curb side recycling. I'm a huge fan of donating - food, used clothing, whatever.  I dream about being amazing at re-purposing.  When I do my dishes I ponder over tupperware vs. plastic bags.

This morning I was putting away laundry and realized I have a ton of stuff just hanging out in my closet because I don't know what the heck to do with it.  Old layering shirts hang beside their new replacements, and their new replacements.  Shoes that have holes in the bottom and haven't been worn since before I was married are gathering dust.  I can't make myself throw them in the trash.  It seems like such a waste.  Am I sick?  Am I hording things that are unfit to donate?  I wouldn't dare take these things to the D.I. (like Goodwill, in case you don't live in UT).  So I'm asking you: what do you do with stuff when it's unfit to donate?  Are you an amazing re-purposer?  I don't need one more cleaning rag.  Help!