I use calipers and plug the numbers, plus my age + weight + gender, into a couple of equations I found on the web, and take the average of those results.
( 1.378 * Waist - 0.0174 * Waist2 + .213 * Age - 5.84 )
10.32 * log( Bicep + Tricep + Waist + Shoulder ) + .0657 * log( Bicep + Tricep + Waist + Shoulder ) * Age - 27.03
Where I take skinfold measurements from my bicep, my tricep, waist (a few inches from my belly button), and scapula (between my shoulder blade and my spine). The last one is difficult to do myself ;-)
I created an online calculator for myself, because I'm nerdy and I like doing such things. It also calculates some other meaningless numbers; BMI, basal metabolic rate, activity based metabolic rate (supposing you give it an accurate estimate of your activity level) etc.
I take two equations because I notice they both disagree with what my Tanita Bodyfat Monitor scale says (hint, hint) as well as what my eyes suggest.
I see what my Tanita says, but only use its number as an indication of a general trend. "Oh, it's a percentage less this week than it was last week, so I might be making some progress with fat loss".
Same with my measurements, but I think they're more accurate (but not completely) e.g. I get certain numbers as a result - but visually, my body doesn't agree with other "eyeball indicators" like 'should be able to see abs at 10%' etc.
So who knows? :)
BTW, the calipers I bought can be had pretty cheap online.