1/4 to 3/8 inch width elastic
Step 1: Cut off the top of the tshirt. Make sure to do a slight upward curve at the sleeves so you don't end up with a V as you hem the sleeves. (I will take a picture of this close up in the next few days and post.)
Step 2: Fold over the neck and sew a casing. Leave a small opening to insert the elastic.
Step 3: Insert elastic using a safety pin. Try on and wiggle around elastic to make sure you have enough, cut and pin. (I use about 18-20 inches for a 3-4T)
Step 4: Sew elastic ends together. Insert into the casing, and sew up the casing opening.
Step 5: Voila! You're done!