Normally, I cut the big and work around the little squares. But you will have a larger piece of leftovers if you cut the following:
Cut a block 7" x 14" with the 14" on the 18" edge. This will produce your eight 3.5" squares
Cut the 12.5" next to the 14" cut and along the 22" edge. That will leave you a little bit of fabric left.