I have no idea what 'magic balls of yarn' are. I'm way too ocd for that, i need specific yarn , specific amounts, colors, types etc this randomness with loose-ends is NOT my thing. But it gets my tiny bits of left overs out of my house so- go for it yarn club people!
As for less overwhelming options, can you pick a spot and start there? Start small- one pile, one thing, one class of items at at time? Kids old outside toys? a pile of papers on the counter? A box of shredding? The basket of shoes? Sort out the dvd's, donate the VHS tapes? when you do laundry, dont put it away, put it in donate(or trash) then when the bag is full immediaetly take it to the donation center?