Lillian Beard was doing laundry in the basement of her Indianapolis home this March when she decided to peel off her blue jeans and toss them into the wash. Good idea, except that Lillian forgot the $462 she had tucked in her pocket—money from the tax-refund check she had cashed earlier in the day.

When the soggy bills emerged from the wash, Lillian knew just what to do: She'd put them in the microwave for a quick dry—maybe, oh, 40 seconds' worth. Trouble was, "I bake a potato at five minutes, 55 seconds," says Lillian, 66, "and I guess I was thinking potatoes." The result? An incorrect oven setting and a pile of charred paper.

Next day, Lillian went to the bank with the remains of her money. People there said they couldn't help her without the serial numbers of the bills, and since Lillian doesn't memorize the serial numbers of her bills before she cooks them, she stuffed the burnt remains into a mayonnaise jar and left. At least, she said philosophically, "I could show people I have this kind of money to burn." Later, at the Chevy truck and bus plant where she works as a metal presser, she had to bum a quarter for coffee. When someone asked about her refund, she showed them the jar.

Word of Lillian's bad luck reached John Shaughnessy of the Indianapolis Star, and he suggested that she send her ashes to the Office of Currency Standards in Washington, D.C. There are 21 people there who identify damaged money like hers, and they handle more than 30,000 cases each year. She mailed the ashes and some burned bits and ends that she had saved, and two weeks later she received a check for $231, the amount they could identify.

Lillian gave part of her reclaimed refund to the American Cancer Society, part to some friends with bills to pay, and then she bought food for some elderly people in her neighborhood. Finally, she splurged and spent $23.65 on a lobster tail for dinner for herself. "When the money burned up, I was resigned to not having it," she says. "Everyone likes money, but I feel there are a lot of things that are just as important—like caring about people." All the same, Lillian says that she'll be more careful in the future, because laundering money can lead to big trouble.