ok, here are some tips for the real enthusiast.
I found a 12" vinyl cutter on ebay for about $100 or less. It's made by USCutter. It's not a PREMIUM cutter but comes with everything you need to cut out designs. Now I bought this specifically for cutting disc designs, but you can by a 24" or 42" cutter for a little more, and cut out a lot of other types of designs.
Also, I found a 12" roll of vinyl for $13. It's 50 yards long! That's right, 13 bucks for 50 yards. It's white but who cares what color.
Guess what,.another 50 yard roll of transfer tape on ebay for about $15. Can't go wrong.
I use an exacto knife for one thing only, for easy removal of already cut vinyl pieces.
It is important to have clean, dust free, smooth vinyl when cutting. If you have dirty vinyl your cuts will start to have hangs, which will make the application much more difficult. I have my vinyl cutter cut out my design, cut excess vinyl off, depending on the design will either remove the cut pieces, or apply the transfer tape. I've discovered that transfering the entire design on the disc, THEN removing the cut pieces works well, because the neighboring vinyl is stuck to the disc, and less likely to be pulled up when removing the vinyl holes. Also, when pulling vinyl off the disc, ALWAYS pull directly off, perpendicular to the disc surface, if you try and scrape or scratch the vinyl off, you will definitely leave the glue residue behind, which makes for a awesome fun cleanup job later.
WAIT, before I go any further, there is a really really easy two color process that can be done here. Let's say I want to do a disc with a red picture and black lettering around it. I'm going to remove the black lettering from the disc first. Dye it, using the same technique as Acid's post, clean, dry, and then remove the vinyl for the red picture. You can then dye directly on the places where the black lettering was, because the only thing the red dye is going to do is make your black a little blacker. Now, remove the vinyl stencil and you'll have your simple two color design. This works well for any color in combination with black. You can also mix colors that you are confident are going to mix well....
For example: I would dye the inside of a flame red, remove the next ring of the flame and dye it orange, then finally remove the outer ring of the flame and dye it yellow. Each color coordinates with the previous color and fortifies it. My red got a little redder, and my orange a little oranger (?).
I can make a similar post to Acid's showing the equipment I use, and pictures of each step I take to make multiple color dyes if anyone is interested. If so, let me know here.
I don't claim to be a professional disc dyer or anything, but I've ruined dozens of discs to get to where I am today! I still have a buttload to learn to get to some of the dyes I see out there. WiDye is the most impressive I've seen, does anyone know his secrets? He doesn't answer emails.
