The first step to a functional, organized, uncluttered closet is going through everything you've accumulated and sorting clothing, shoes and accessories into three piles: keep, throw out and give away. Clothing you haven't worn in a year should be tossed or given away. The same goes for that shirt you wore once and the pants with the stain. Once you've gotten rid of things you don't need, now's the time to create a functional closet space. Add shelving above your hanging space that extends to the ceiling. You can also add modules and a defined space for shoes as well as drawers for folded clothes. Use baskets to help organize smaller articles of clothing and accessories. Make sure to measure your closet before deciding on what organization devices to use.
Clean your shelving before replacing clothes and shoes. You can organize your belongings by length, function and colour. And don't forget to actually drop off your clothing donations - putting them back in your closet "until you have time" rarely works. Once you're organized, vow to only add a new article of clothing if you get rid of something you already have.