There are two methods of recycling a sweater into re-usable yarn. The first method is done from a work-in-progress (wip), the second method is done from an already finished-object (fo).
Step 1: Remove the needles
Then, lay the offending sweater flat sew you can begin frogging. Frogging is the process of ripping the stitches out: As in, "Rip it, rip it, rip it!"
Step 2: Frog It!!
As you rip out the stitches, gently wind the yarn into a ball.
Frequently remind yourself that you will not knit clothes that will not fit you like the model in the picture, unless the model in the picture has a similar form to your own.
Step 3: Continue frogging the sweater.
Wind gently so you do not stretch the yarn out anymore than it is already. This is especially important if you are unraveling a cotton, silk or wool sweater.