For a 2 1/2" finished block, add 7/8", which would be 3 3/8" squares. That's a little larger than the 3 1/4" you started out with, so I suspect that you want your FINISHED block to be 2"??? If this is the case, you want to cut your original squares 2 7/8". I also hate to trim my HST units, but I do for accuracy's sake. I always add an inch to the finished size and then trim down.