Turn pants inside out and lay flat on floor after ironing and cleaning them.

Cut off one pant leg at the crotch.
(If you mess up making this the first time you always have the second leg. You will also have some daisy dukes but I don't recommend wearing them.)

Rip the inside seam out.

Fold and measure out the size of your bag how you like it. Remember that the top flap is an inch or two shorter then the bag.
Also try to line up the outer seam in the middle of the bag and flap.
(You will have a pointed flap, but just pin that into a straight line)

Cut off the excess fabric (leaving seam allowance) and pin together.

Sew seams together using zig-zag stitch and hem the flap using a straight stitch. Square the corners as well.
(google this if you don't know how, or check out threadbangers)

Remove two belt loops off the pants.

Sew the belt loops on the inside of the bag, on either side of the seams. They will be used as loops for the shoulder strap.

Cut off the button hole and button in straps. Be careful not to damage the zipper because it can be useful for decorating later.

Sew the button strap to the center of the bag, and the button hole strap to the center of the flap.

Now sew on decoration to flap. You can silkscreen or stencil a pattern, or you can use a goonies patch like I did. You can also add any pockets/zippers/pen holders/ etc...

Now make a strap out of your roll of twine. Cut pieces of twine about twice your arm length then braid, macramé, or just tie knots at equal distances to form your strap. I left some off the end that I plan to bead later.
(If you are having trouble finding twine at craft stores, like I did, check out your local dollar store.)