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!
The stickers are about one inche tall which were perfect for the word "wombmates".
To center the words I started with the middle letter and worked outwards
If your word has an odd number of letters then put the center letter in the middle, Be sure to take into consideration narrow letters like "I and J" and space accordingly.
Make sure the stickers are on securely.
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.
You could reuse your stickers (like I did for my second onesie). Once your stickers are no longer sticky I would recommend tossing them, as the paint may seep through. Be sure to heat set your shirt with an iron. I didn't heat set my shirts and they did fade after I washed them.