and makes stuff

Making bags from wool sweaters is a great way to recycle sweaters that may have been damaged from moths or that have been shrunk accidentally.  You must make sure to use only sweaters that actually will felt. 100% wool is best. Look for a "dry clean only" label. If you don't have any old sweaters at home, you can find them easily at thrift stores.
You can chose sweaters that have designs on them or make your own design using a felting needle and some wool roving.

The first step is run the sweater through a washing machine cycle with warm water, and then dry in the dryer.

This should start to full the sweater,  shrinking it a bit.

Now you need to figure out how big you want your bag to be. The bag will shrink to about 2/3 its size, shrinkly slighty more in height, so cut the bag much deeper than you want it.  I will often use the whole body of a women's large sweater for the body of the bag.
Simply cut off the top of the sweater right under the armpits.
This will give you a tube with ribbing on one end. The ribbing will become the top of the bag, so you will sew the tube closed on the other end, right sides together. Zig zag along all seams to reinforce them.

Now you need to make a gusset. With the bag inside out, grab the bottom corner of the  bag, center the side of the bag over the bottom seam. You'll need to maneuver the bag about a little bit. You should see the bottom corner as a triangular bit protruding from the bag. You will measure from 2-4 inches in from the tip of the triangle and sew a seam straight across the bottom of that triangle.  Zig zag the seam and cut off the triangle leaving a 1/4 inch seam. Repeat for the other side.

To make the handle you will use the top of the sweater. Cut a long, 4 to 5 inch wide strip of sweater, cutting from one cuff, across the chest to the other cuff.
Fold this in half and press. Open out folds and press cut edges to center fold line, fold up again and press.  Sew along both long edges.  Put aside for now.

If you want to needle felt a design onto the bag, now is the time. 

Turn the bag right side put and place a piece of upholstery foam inside.

Arrange the wool fibers in the design you want, remembering that the design and the bag will shrink-so lay it out bigger, and thicker than you want it to be. Lay out the wool, making sure not to twist it, and just start stabbing it in an up and down motion with a felting needle.

You want to make sure the fibers are going through the sweater and can be seen on the inside like this:

Pull the sweater up off  the foam periodically so the bag doesn't get felted to the foam pad.

When you are satisfied with your design, turn it inside out and run it and the handle (still separate) through the washing machine on hot, then dry in dryer.
The bag will shrink and probably have pills when it comes out.  Steam any wrinkles with an iron and shape the bag by tugging in to shape, steaming it to get it more flexible before doing so.  Shave off any pills using a sweater shaver or carefully with a safety razor.
The handle can now be cut to size and sewn on. I like to sew the handle along the sides of the inside of the bag from the bottom, so I cut my handles extra long.  If it is felted really well the handles should not stretch a lot, but they may stretch a bit, especially of you carry heavy loads in the bag, so keep that into account when deciding on the strap length.

It's a little hard to see here, but here is the inside of the bag with the handle sew down. I just sewed aound the edges of both sides of the handle with a blind stitch, and several rows of stitching where the handle meets the top of the bag to make it extra secure.

That's really it! Very simple.  You may chose to line the bag with fabric, but I like mine unlined.  Then they still retain a little elasticity and you can cram just about anything into them that way.

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