Catholics bless themselves with holy water as a means of invoking God's grace and protection.
Q: Why do Catholics bless themselves with holy water? (Conway, South Carolina)
A: A distinctive feature of any Catholic church are the holy water fonts usually found at the entrances to the worship space. Catholics customarily dip their fingertips in the blessed water and make the sign of the cross upon entering and leaving the church.
We do this because holy water is, first of all, a reminder of the waters of our baptism. But also, holy water -- a sacramental -- is frequently used as a means of blessing persons, places, and objects. Catholics bless themselves with holy water as a means of invoking God's grace and protection.
Although we most often see holy water in churches, it is also possible to use holy water in other places and situations. For instance, many Catholics observe the beautiful custom of keeping personal holy water fonts inside the doors of their own homes.
Q: What are sacramentals and why must they be burned or buried? (St. Cloud, Minnesota)
A: The Catechism of the Catholic Church defines sacramentals as "sacred signs which bear a resemblance to the sacraments," which make us more "disposed to receive the chief effect of the sacraments" (grace), and through which "various occasions in life are rendered holy" (CCC 1667).
There are different kinds of sacramentals, including sacramentals that are not material objects at all. The catechism goes on to note that our most important sacramentals are prayers of blessing, from simply daily meal blessings up to more solemn, lasting blessings, such as the dedication of a church building, religious professions or the consecration of virgins (CCC 1671 and 1672). Interestingly, prayers of exorcism are also considered sacramentals (see CCC 1673).
However, it is clear that your question is addressing our tangible sacramentals -- rosaries, holy medals, religious statues and images or other blessed objects. Canon law doesn't mention specific disposal methods for material sacramentals that are no longer useful or have fallen into disrepair, but the general idea is that blessed objects need to be disposed of in a respectful manner.
This is the same principle behind our etiquette for the proper disposal of an American flag. A worn-out flag is to be destroyed in a dignified way, preferably by burning, because of what the flag represents. A sacramental -- blessed and recognized by the church as an aid to receiving grace -- should be disposed of with honor and respect. Burning a blessed object so that it no longer exists intact, or returning it to the earth via burial, are both intrinsically more reverent acts than simply adding a sacramental to the trash.
Practically speaking, if you have sacramental objects which you no longer need but which are still in relatively good shape, the best and easiest thing to do is pass them along to someone else who could use them. Many parishes have something like a "free table" where parishioners can leave their no-longer needed Catholic books and small religious articles for anyone who might like them.
If you have sacramentals at home that are broken beyond repair, and you are truly unable to burn or bury them yourself, you can call your local parish for advice.
Incidentally, there is one time every year when a parish will go out of its way to burn an old sacramental for you: prior to the start of Lent each year, when last years' Palm Sunday palms are collected and burned to create the ashes used on the upcoming Ash Wednesday.