font used: Plump
I had recently seen an offset shadow on text that had a transparent gap between the text and its shadow. I decided to attempt his effect by adding a stroke to the the text and then subtracting that stroke from the shadow. (I also added a small blur on the shadow layer as the edges of the selection weren’t anti-aliased and adding a blur was easier than going back in my history).
I added a grunge texture to the background and overlayed it and finished by adding a hue and saturation adjustment to the background and shifting it to quickly experiment with different colours. just for kicks I inverted the whole thing and tried a few that way.
Color pallet for the letters on adobe kuler