You can do it one of two ways depending on whether you get overwhelmed too easily or not.
1. The Flylady way - Start sorting in 15 minute increments.
~ Are you saving all those newspapers for any reason? Recycle!
~ Do you need those school papers? Recycle!
~ Recycle all those ads! You're not going to use them.
~ Do you need the information that is scribbled on random scraps of paper? Addresses or phone numbers? Write them in your phone book. A date for an event? Write it on the calendar.
~ Bills: Go through them. If it's a paid utility bill or credit card bill, you can throw all of them out except the current month's statement. When you pay a bill, write the date you paid it, the check number you used, and the amount you paid. When you get the next month's bill, make sure everything is accurate and throw out the previous month's statement. For anything you have paid in full (medical/dental bills, loans, credit cards), keep the letter or statement that says the account is paid in full. You may need this in the future.
~ Kids' drawings, I like the pp's idea, everyone has their own way of deciding what to keep and how to store it.
2. Or you can just set aside a day and do all of this at once. That's generally what I do. I cannot do it in just 15 minute increments because I just want to get it all done at once.