Layering is good for more than just hiding those extra pounds. When you use creative hanger solutions, like tiered hangers that let you stack clothes conveniently, you can sometimes double or even triple your useful space. OK, it doesn't work with everything, and you have to reprogram your brain to understand and use the system consistently, but when it works, it works really well. If the alternative is keeping things in a pile on the floor, tiered hangers and other hanger wizardry is a smart way to go.
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HowStuffWorks gives advice on how to unshrink clothes.