I honestly didn't think I could find a system that would work, but although it's not perfect and I'm still working out the kinks, here's how I cut back.
Using Nate Berkus' money, I bought about 30 cloth napkins and a stainless steel small garbage can that fits underneath my kitchen sink. Now at meals, everyone knows that we use cloth napkins and after dinner, everyone has to put their dirty napkin under the sink (we're still fine-tuning the system, but typically the same napkin is used by the same person all day, it just sits rumpled and messily on the kitchen table throughout the day).
I also purchased an ample amount of flour sack cloth dish towels and I have them handy to grab for wiping up spills, cleaning the countertops, laying them out to make the kids lunches, etc. I still want to make them more easily accessible, like a bin on the counter, or a big basket in the corner....I'm still mulling over my plan.
I still have to clean some things with paper towels, I just can't bring myself to use towels for scrubbing down toilets.
But - I am almost at the point where I can take the paper towel holder off the counter and have the paper towels tucked away somewhere. That's huge for me. HUGE. I really love paper towels.
Juli must share how she NEVER uses paper towels. You must have a gigantic bin of rags. Everyone kept telling me that the laundry would be crazy, but I have not found that to be so at all. Everyone please share your paper towel reduction tips with me!