I have a large number of dish towels that I keep in my kitchen drawer. I use these in place of paper towels for many things, including cleaning up spills. Whenever I need to clean anything up, I use these.
When the dishcloths are too stained to remain in the kitchen, they are placed in the rag jug. This can be a milk jug with the top cut off, a gallon jar or any other container that you have on hand. This is also where I put old towels/washcloths and other rags.
When they are put into the rag container, they are then used for heavy duty cleaning, and everday cleaning.
This saves me a great deal of money, so I am able to live a bit more frugally.
The newer ones could even be used as napkins. Or you can make cheap ones from leftover fabric. When these are too stained up, you can put them into the rag jar as well.
I also re-use paper and envelopes as scrap paper. This is important for homeschool and public/private school families alike. These can be used for first drafts and figuring, as well as for leaving notes for people and taking messages. These practices will save you quite a bit of money.