Recycling and dyeing yarn, part 2 - thanks to Cassie (and to my faster internet connection today...I'd wanted to post more dyeing links but the interwebz were too slow).
THIS is the original picture that inspired me to start yanking apart cheapo sweaters - isn't that wrap pretty? Here's the free pattern! And THIS is the original tutorial I read about how to do it.

Knitty has another fantastic tutorial about how to create gorgeous handpainted yarns using plain old food coloring. I love the idea of saving yourself literally hundreds of dollars (if you think I'm joking, check out the prices of, say, a hank of handpainted 100% cahsmere or merino yarn) by spending maybe $10, MAX, on a sweater and several bottles of food coloring. I have found MANY cashmere sweaters at Goodwill - if they aren't my size or style, I simply tear them apart, dye the yarn, and then have loads of gorgeous cashmere yarn to knit with.

You can also dye yarn with easter egg dyes. This is extremely economical if you stalk the local grocery stores the day after Easter. You'll find all their excess dye on sale for as low as 10 cents per package ( no joke). Stock up and have fun dyeing!