We all have those extra large t-shirts hanging about. I think I actually got this from a case of Keith's. It was huge! It worked great as a pregnancy jammy shirt but now that I am done pushing out babies I have no use for it. After searching the web for ideas I decided that a boxer shirt was the best transformation for it. This took me a whole 20 minutes and I didn't have to break out my sewing machine.
Step 1: Cut off the collar of the t-shirt. The best way to accomplish this is to make a slit about 1-2 inches (depending on how wide you want to collar to be) from the edge on either side. Starting with the front collar, cutting from the 1-2 inch slit and staying as close to the collar as possible towards the middle and meeting up with the slit on the other side. Flip over the shirt and do the same with the back. You should have an oval collar compared to a circle.
Step 2: If your t-shirt is NOT hanging off of you like a blanket (such as mine was) you may just need to cut the edges of your t-shirts sleeves to achieve the bagginess that you desire. Do this to both sleeves
If your shirt is overly massive you will need to cut off the entire sleeve. cut right at the seam between the body and the sleeves leaving the raw edges on the body.
Step 3: cut off a couple inches from the bottom of the t shirt to your desired length. The easiest way to do this is to fold over your t-shirt bottom as you cut it, getting an even length the whole way across without measuring.
Finished product: try it on, adjust appropriately to your body. I ended up taking another inch off of my collar for a more off the shoulder approach (don't forget to keep the oval shape so that it doesn't go too low I the front).