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1. Select a font and font color, and then type in your desired text onto the image.
2. Rasterize the text: right click on the text layer and then select rasterize.
3. Expand your selection using by 3px (Select > Modify > Expand).
4, Add a new layer behind the current text layer (Shift + Ctrl + N).
5. Fill the selection with a color of your choice.
6. Select the text layer. Select the text color using magic wand tool, and then delete the color.
7.

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Select the gradient tool. Adjust the settings to create a funky gradient scheme.
8. Add this scheme to your selection.
9. Give it a worn look by following the steps in Section #2 above.
10. Save your image. And you are done!