Depending on how big your stash is, the prospect of organizing it can be daunting. But you acquired all that yarn because you love yarn, right? Isn't the thought of cleaning out and organizing your stash more appealing than, say, cleaning out and organizing your garage?
The first step in the process is to plan. Think about how you use your yarn. Do you select a pattern, then go to your stash to see if you have any yarn to use for it? If so, it might make most sense to organize it by weight. Put all your worsted-weight yarn together, your bulky, etc.
Or do you go to your stash looking for a specific color to work with? Then maybe you should organize it by color.
Perhaps you think about new projects by type. You think to yourself, "I want to knit a pair of socks." Or, "I feel like making a lace shawl." In that case, perhaps you would want to group your stash by type of yarn.
Think about your favorite LYS. How do they organize their yarn? There's a yarn store in the town I grew up in, Walla Walla, Washington, called Knitochet. The owner organizes the yarn by color. It's gorgeous. When I was there over Christmas, I wanted to make a pink scarf for my mother. So a store organized by color was perfect. But I would never organize my stash that way -- I go shopping in my stash for yarn for specific patterns. So I organize by weight, with a few special categories for types of yarn thrown in for good measure.
If you can identify how you use your stash, you can figure out how to organize it. Once you've come up with categories, it's time to sort it. Just dive in. You have your categories set up, so assign a box or bin (or bins) for each category. Labels can be helpful. An index card, Post-it, or piece of paper attached with a binder clip is easy to make, doesn't fall off, but is movable if the size of your bin needs to change. Pick up each ball or skein, fondle it, then put it in the appropriate bin.
If you come across yarn that you hated working with, or that turned out to be scratchy, or was just a bad idea in the first place, consider letting it go. Your stash should be populated by yarn you love. Your local knitting guild might accept yarn for charity knitting. You might be able to swap it with knitting friends. Or you could consider donating it to Interim House in Philadelphia, a residential alcohol and drug rehab center for women that has a terrific knitting program. I blogged about my knitting group's donation to Interim House here.
Once you've sorted everything out and let go of what you don't love -- and I realize this might take some time, depending on the size of your stash -- you can figure out how you want to store your stash. Here's a dire warning: Don't go shopping for containers until you've completed the sorting and purging. You won't know what you need before you've accomplished that. You could waste money on inappropriate containers. This is money you could have used for yarn.
Watch this space: Next Tuesday I'll talk about some storage options for your stash. In the meantime, figure out how you want to organize your yarn and start that sorting!