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. 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!