First I ripped out the sleeves and shoulder seams. I tried it on and pinned the side seams before I cut the extra material off. Below is a diagram showing the approximate cutting lines:
The dress had a short zipper in the center back. I ripped it out and moved it down to line up with the new waistline, and finished the waistline with a simple, narrow hem that won't add bulk.
So there it is: the best quarter I've spent in a long time!
Be sure to visit the Biblical Womanhood blog for more Frugal Friday ideas!