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First things first:
1. Wind yarn into skeins. (I used guitar stands, open kitchen drawers, whatver as long as its stable and comfortable). I used a small scale my husband previously used for measuring rocket powder to achieve my 50 grams of yarn.
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2. Soak yarn in vinegar and water (white vinegar). I suggest looking online for the correct proportions because I just guessed (and that's as dangerous as not checking your guage).
3. Lay out yarn on plastic wrap. I suggest lying it down in a long line, instead of leaving it in a oval like you see in the picture.
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4. 'Paint' as you see fit. I wore gloves (the second time) and used chopsticks (first time with the dye straight out of the bottle) and paintbrushes (second time diluted dye in a little bit of water)Either way works.
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5. Once done roll up yarn in plastic wrap.
6. Microwave for 2 minutes at a time off and on. Give the yarn time to rest in between. I used a glass pan/pieplate. (candle for stinky vinegar smell)
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7. Rinse, but don't shock the yarn (it'll felt). You should have almost no dye at all coming out of your yarn. I repeat very small amounts of dye should be coming out of your yarn. Otherwise rewrap and nuke some more.
8. Dry (I wrung mine out and hung it in the shower)
9. You may have to rerinse that funky vinegar smell out.
10. knit.
I used Lion Brand Fisherman's 100% wool as Faith already said. It's cheap at ACMoore, especially if you have a coupon (200grams for barely 4 dollars).
Here's what I did the other day, now that I'm wiser about this whole handpainted yarn thing...
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Not bad, huh?