Choose your image. For this example I'll be using this image (see below).
Now select the Rectangular Marquee Tool (). Now select what you want to be inside the destroyed boarder. For this tutorial I selected the center rectangle of the image. Then press "Q". Now whatever was outside of what you selected should have a red overlay.
Now select the Magic Wand Tool (). Use it to select the stuff that is RED. Once you have selected the stuff that is RED, select the Filter dropdown menu. Then go to Distort, then Ocean Ripple.
From the page that shows up after you select Ocean Ripple you'll see a few things.
The Menu That Lets You Select Between Effects
and The Menu That Lets You Mess With The Settings
I'll be using Glass for this tutorial but you can achieve a similar effect by using ocean ripple. So go ahead and select GLASS. Now you should notice a new settings menu. I usually leave it on the default settings.
Press OK once you have selected your desired settings. Then press CTRL+F to multiple the effect until you see a more desired effect.
Now this is the final step I guess. Now press "Q". Now the center of your image is selected. Press CTRL + SHIFT + I to invert your selection. Then the easiest thing of all, press Delete.
That's my final result. You can add a small 1 pixel boarder with stroke (not covered in this Tutorial).
If you have any questions feel free to message me in my profile. AND YES I KNOW I SPELT BORDER WRONG >8(
For everyone who doesn't know what the "Red" areas are, they are part of a quick mask.
you press Q and basically you see a mask of what is selected. You can add/subtract from the red area with a white/black brush