In the picture above is what remains of two sweaters I've been unraveling (aka frogging) for yarn. The hat is one I made out of the yarn from the dark sweater. It's hard to see the colors but that sweater had large blocks of 4 different colors, using three of these help together I made the hat on a knitting loom.
I am a devotee of recycling and thrift shops and am always looking to save money. It takes some time to unravel a sweater but it takes time to earn the money for yarn too. Where I live we have a thrift shop where you can buy a brown shopping bag full for $3. I can fit 6 or more sweaters in the bag and I get a lot of yarn from these sweaters.
This link will take you to a site that explains how to do it better than I could. Read it before you go out to buy because not all sweaters are suitable. Then go looking, you can find some awesome yarns if you keep an eye out for the right sweaters!!