Ruler (if you want to be precise, I just winged it...)
Flatten out your bag, fold it in half 3 times, pushing the air out as you go. Starting at the bottom, cut strips about 1/2" - 1" wide, but not smaller than 1/2", depending on how thick you want your plarn to be. It will thin out as you are knitting or crocheting it up. I usually cut mine at 1/2". Unfold your strips into large circles. Now, you just create a basic square knot to connect each circle.