How to Make You're Own Stencils

I have been hand-painting signs and wood. Always by this long method of tracing the letters onto paper, then onto the wood, then carefully painting within those lines. It always comes out well, but sometimes I just dont want to go through all those steps. That's when I got this idea to make my own stencil. Here is what I started with:

Plastic, sturdy enough to hold a shape, but easy enough to cut. I used the plastic holder that a four pack of wrapping paper came in from WalMart.
Exacto knife
Sharpie
Drawn out letters of chosen design
Cutting board

The first step was the choose the design, and have it written out on a piece of paper. I free-hand drew mine out. If I had wanted crisp, precise letters I probably would have traced them, but seeing as I was going for a more rustic and hand written look anyways, it's imperfections worked out well. I would suggest, however, for some styles, such as cursive lettering, to be a bit more careful and precise in your drawing and cutting.

Second, I cut out the letters from the paper with the Exacto knife. Remember to leave centers of letters (those like A, O, D, anything with a big open center) connected to the outside in a small spot. I remembered for the O, but needed to tape in place for the D. Good thing that happened on the paper portion instead of the final stencil!

Then I traced the letters onto the plastic sheet I had using the Sharpie, after cutting the sheet down to size.

Next, cut the letters out again, this time from the plastic. Take you're time, you want nice looking letters you can reuse later. I found that instead of moving the Exacto knife frequently for the shaping, I moved the plastic sheet underneath it to follow the lines. It turned out easier than the other way. 

Then just stencil onto the wood! Voila!