2) Iron it and lay it very flat with no wrinkles.
3) Take a good pair of scissors and cut slits about an inch or two wide each on each side of the shirt, going through both front and back, all the way up and down from the bottom of the shirt to the armpit. You can cut into the shirt as much as you need to, usually I start at about two inches into the middle.
4) With the shirt still very flat, cut along the edges of the slits and cut the front open seperate from the back (I hope I'm explaining this right--you should have the front and the back seperate when you're done with this)
5) Tie the two sides together with the slits your cut, one of the slits with the slit opposite of it. Only knot it once when you're testing it, but double-knot it when you've actually got it the way you want.
Now you can just decorate it. Shred the sleeves, the bottom, cut out the neck, use fabric paints, fabric letters that you have cut out yourself, be creative!