Instead of cutting out letters with a machine I purchased letter stickers. These were in the dollar spot at target and came with five sheets. I would advise finding stickers with multiple sheets so you can be sure you have enough letters for all your words. It's the worst when you are in the middle of a craft project and realize you don't have enough supplies!
Now take a newspaper and block out around the words. Tape around the words in a square. I used clear packaging tape for this,
Spray the words with fabric spray paint. I used Kryon spray paint which they said is safe on fabrics and non toxic.