Note: I highly recommend reading the whole instructable before trying it, rather than "reading along." There are tips sort of sprinkled throughout because of my writing style, but it will be beneficial if you get them all ahead of time, causing less trouble for you! =)
Step 1: Materials
--paintbrushes (most any style will work, though bushier is better at the moment)
--newspaper or wax paper
--thin cardboard or paper or a cuttable material
--scissors or an exacto knife
--masking or painter's tape (optional)
Step 2: Preparing the Stencil
Using cardboard is sturdier, so the stencil can be re-used more easily; however, later on it may cause some difficulty while painting. I have successfully reused a paper stencil three times in a row without any tearing or warping issues, so that is up to your discretion.
Before you cut out your design, lay out your tshirt (or other cloth you're going to paint on) and double-check that the design will fit and will look okay.
Using the scissors or your exacto knife, CAREFULLY cut out your design. If you have islands that are relatively large and you want to re-use the design, make sure not to ruin them, and set them aside with the stencil.
On this stencil, instead of using islands we used a complete lack of filler or a connecting brace instead.
Step 3: Setting Up the Work Area
Lay out your t-shirt flat and find a piece of cardboard roughly the same size as the area you want to paint. Put this inside the t-shirt, making sure it is centered and the material is not stretched. This will ensure that any paint that soaks through will not ruin the other layers of material.
Take a piece of scrap plastic and pour just a half dozen drops or so of each craft/fabric paint onto it. This sort of functions as a pallette.
Step 4: Getting Ready to Paint
--tape it down, or
--hold it down without moving.
This ensures that your design edges stay consistent and you don't end up drifting to one area of the tshirt that you had not planned on working on.
Center the design, and firmly hold or tape down the stencil, making sure your tshirt doesn't stretch. At this time you will want to tape down islands with tiny loops of tape or create an island completely out of tape (if you're willing to throw it out right away).
Make sure your islands are lined up and your design is centered or in the area you want it to be!
Step 5: Painting
While holding down the stencil with one hand (even if it's taped!), use your fingers to hold down the edge you will be painting right next to. This will help the paint from getting under the edge and making it look a little messier.
Use your other hand to dip the paintbrush into your paint. Using a scrap piece of cardboard, wipe just enough off so that there aren't globs, but there is still enough paint left to make a difference. This is similar to "drybrushing" technique.
Dab up and down with the paintbrush, making sure to keep it as clean or messy as you desire. More paint may be bolder (depending on the material the t-shirt is made out of), or it may soak in. Either way, usually two times going over the full stencil somewhat haphazardly gives a strong enough but still "faded and worn" look. Keep in mind your color will soak in and appear darker on just about any color except white. Other colors will also affect the stencil accordingly.
(I have a video of this to add... I'm working on getting it up for you!)
After you run out of paint each time, you can also go back to the scrap where you "drybrushed" to get some more paint, rather than going back to your makeshift pallette each time.
Step 6: Finishing
I have had no problem letting my shirts dry in a few hours, ready-to-wear. If you are worried, send it through the dryer before washing it. I've never had any problems with shrinkage, either, but that may be because this technique allows the paint to soak into the shirt more, rather than putting enough on that it sits on top.
Don't forget to clean up your area! Washing your brushes immediately is a good thing, too, in my experience. (I'm no professional, though.)