Sorting it out
So, now your yardage is happily bolted up and shelved, and it's time to go through that scrapbag. Sorting scraps is a lot like editing; some call it "curating." My personal rule of thumb is that anything larger than my hand is worth saving. From the looks of my scrap bins, I may have to rethink this standard!
We tend to consider our fabric collection as an investment, and that's a smart way of thinking. But that doesn't mean that every square inch continues to carry value. Repeat after me: "My fabric is a tool that allows me to create beautiful things." Fabric is something we use to make something else, and if it's not usable, it's not worth your (very limited) shelf space. If you feel you need to use every last bit, look for a project pattern that calls for small pieces. Our Soft and Colorful Baby Book uses 2" squares, so it's a good choice.
Be honest: do you make scrappy quilts? Do you do intricate applique? If you don't, do you need all those tiny scraps? If not, consider giving them away to another quilter, a teacher, or donating them to Goodwill or Salvation Army. If you do, then get to sorting. Sorting scraps by color goes quickly, and the process will help you get a handle on what fabric you have at hand. If you're feeling really industrious, press the really wrinkly scraps, and trim off any unusable bits. Pressing and cleaning up the edges saves a remarkable amount of space. I sort my scraps into shoebox-sized plastic bins. I keep holiday-themed fabrics in separate corners, and I keep vintage scraps separate, too.