Like many of you I don't cut anything fat quarter size, but otherwise I cut the largest square I can and then the next largest square until I have used as much of the scrap as I can. The leftover pieces then go into a bin for a dog bed for a shelter or where ever needed. I start with 1 1/2, 2, 2 1/2, 3, 3 1/2 etc up to 10 inches and then place them in clear shoe boxes by their size. I have several tubs of scraps to cut some from various projects, some from scraps given to me etc. I need to get them cut up and out of my way but too many things seem to get in my way darnit! Have loved to see how others handle them. Oh yes if any are strip size I start at 3 inches and work down to 1 1/2 inches.
Happy Quilting everyone