I got rid of all my daughter's baby clothes after she grew out of them! I did keep some special dresses, Christmas etc, but the rest worked through a network of friends, cousins and nieces. We all shared and passed along and it was great. If there were some that somebody wanted back, we put initials in the tags to remember. Most of us though kept them moving around. I still get clothes from my sister and pass our stuff down and my daughter is 7. I figure save as much money as possible early, because when our daughters get to the age when they won't wear hand-me-downs or Target clothes, it is going to be expensive! And I think that time is coming soon.