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Well it depends how much the cloth is worn and what is your personal devotional practice.
How it is done in our temples is that each outfit is recycled as per the seasons for upto 2-3 seasons where it is worn by the deities total around 7-10 times. I am speaking of festival deities here because I do not believe that you will have temple sized big deities.
After the 2-3 seasons; the cloth is either auctioned / sold in festivals for fund-raising as it is Maha Prasadam
or the clothes are cut into many small pieces like wrist band or necklace to be distributed as Maha Prasadam amongst devotees (mainly for abhishek clothes).
For your home, you should not give it to anyone for re-use as it is bhog-apradha.
The best way I can think of is either make wearing articles like wristbands (or be creative) or you can simply bury them in your compost (where you would keep your old garlands, flowers, incense sticks remainders and more).
If you are in India; people will advise to you flow them into any river body or pond; but please do not do.
All rivers are female energies and sea itself is Varun God. Do not pollute them as earth can decompose clothes but water wouldn't.
I hope I could have been of some help to you.