First thing is buy a canvas bag in the size you want, or you can make one. I actually bought this one, but I found canvas in cute colors at Walmart so the next ones will be made. You also need wool felt in the colors you want. OK...so you seam rip the bag open on the sides and turn it inside out.
Next trace a word or letter "backwards" on the inside of the bag. You do it backwards because it shows correctly on the front!! You can print something out or just get crazy and freehand it! Which is what I did.
Then you pin 2 layers of wool felt to the front side. You only need them to be large enough to cover the word or letter you choose. I just did one initial for the 1st time.
So then its kind of like tracing with your sewing machine...they said to use a special foot, but it worked fine with my plain old one, nothing fancy. (SORRY NO PICTURE) After you sew over the word you traced on the inside...you turn it right side out and remove your pins.
Next you first cut away the top felt, close to the seam about 1/8 an inch, I think smaller scissors would have been better but who knows where those are... I will have to check the dogs bed or the barbie box! Then you cut around the second layer 1/8 inch from the first cut!