Wow... Ok, so I just wrote this out, and then realized how long it is. So... Sorry in advance. :-S
Anyways, my process has been a slow one, but has picked up steam recently. I've almost always dressed a half-step nicer than my friends, but that's not saying much. College was polos while friends were wearing t-shirts. No big deal.
My first job out of college was in software development and did not require any client interaction so I could wear whatever I wanted. That usually resulted in flip flops, shorts, and a polo. If I ever had to choose between jeans/sneakers and khakis/loafers, though, I went with the khakis/loafers. Dressing up was never uncomfortable. It just wasn't worth the effort to me.
My second job actually required some basic level of attire so khakis or grey pants, polos/buttoned shirts every day became the norm. And I started wearing dressier (though far from what people here would call nice) shoes every day.
Now at my third job, the dress code is similar to the last place, but it's a much bigger office and I just feel sloppy if I don't dress a little better. Since my first day on the job, I've been the best dressed guy in the department (and that includes our managers). Still, that never really meant suits and ties for me until much more recently.
I've always had a reasonable sense for composition and my dad taught me all the basic rules (like matching shoes and belts) when I was little, but I never felt compelled to use any of that stuff until this past fall. Once I started getting my MBA, I noticed a few people dressing up in there and looking sharp. A number of people in the program work in more formal office settings so they're required to dress up more than me. At this point, I'm thinking, "If I'm going to be competing with these people for jobs when I graduate, I better look the part of a real professional."
So at that point I knew I'd like to start, but I realized that with the exception of replacing some stolen suits, I had not bought any clothing in nearly 2 years. My shoes had holes in them because they weren't nice enoguh to repair, but I didn't want to pay for new ones, either. A lot of the clothes had worn thin or shrunk with time, but I wore them anyways.
Fast forward to the weekend before Christmas 2011. My wife and I went to the mall (one of the nicer ones here in Dallas) to finish up our Christmas shopping. We were done by noon on Saturday, but there were TONS of sales going on at clothing stores (40-50% whole stores in many cases). So we decided on the spot that we had saved enough money to have a full-on shopping spree. We spent the whole rest of the day and the entire next day just clothes shopping together.
So we each took $600 to rebuild our wardrobes. I took the opportunity to replace a lot of failing articles and invested more heavily in dressier clothes so that I could wear them EVERY day instead of just occassionally.
I'm the kind of guy who never likes paying full price for ANYTHING. I'm always that guy that enters a store, goes straight to the sale/clearance section in the back, and if I don't find anything there, I just walk back out. So with that mindset and all the sales, I stretched that budget REALLY far and also asked for clothes for Christmas.
It was then that I discovered dappered - not as a style source, but as a place to help find deals. By the time the dust had settled, I had something like 3 sport coats, 3 jackets, a wool coat, 4 pairs of shoes, a watch, 9 dress shirts, 2 pairs of pants, 4 sweater vests, 9 ties... I've aquired a few more pieces since then, but you get the idea.
I purged my existing junk from the closet and kept just a few older things. This has forced me to wear nicer stuff everywhere since I no longer own stuff that isn't nice. So far, it's worked out pretty well.
So bottom line (after I've forced you to read all of this) is that my "dawning realization" has come much more recently. I've had the capability for a decade (or at least i'd like to think so). I was just missing the initiative.