I think binding is the funnest part of making a quilt. It means that you have just about completed the project. I cut my binding 2 1/2 inches like you do. I always sew the binding on then cut 1/4 inch from the edge of the binding so that I have a full binding. When being judged here at our county fair, that is one of the first things the judge looks at is the fullness of the binding. I always sew the back on by hand.