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How I do that: I take the unraveling or torn bath towel and cut it into usable rectangles, discarding the sections with holes and clipping off the ragged edges. This makes tons of terry-cloth confetti, so line your work area with a sheet and have a vacuum cleaner or broom handy (or roll of packing or duct tape) to pick up the mess. Then, instead of trying to hem the heavy terry cloth, I cut a piece of washable cloth the same size as the rectangle I want to save. I put them good sides together. Sew around the edges, leaving a hole to turn. Yes, the corners will be bulky, trim them out if you know how and mind the difference. Turn the layers right side out and stitch the opening closed. Now all the terry-cloth confetti is trapped inside. You can line the towels with coordinating fabric if you want to use them in a nice room. I've even done rags this way just to keep them tidy for longer. Viva recycling!