A year or so ago I made my daughter a dish towel beach robe, but she's grown out of it now and so I'm wanting to make something that might last her a little longer, something not so fitted. I think I've found the perfect project! This tutorial is dead easy, and can be found at Crafterhours. It's so simple to make and all you need is a cute, cheap towel from your local store. You can even make one for yourself (you'll probably need two towels for an adult size though.)
