A question I should have asked first is what kind of guitar are you doing the nut work on, tjcurtin1?
A Fender requires a different method than the one I described. Fender nuts are curved on the bottom to the same radius as the fretboard. To install a nut on a Fender, you'd need to work it from top to bottom. In other words, you'd have to shape the nut by taking it down from the top to achieve the proper height, radius, and string relief. This method would require that you place the nut into the slot in the neck, and then place a straight edge accross the frets and butt it up against the nut. A flexible staight edge can aid in this, as it will follow the radius of the frets. Where the straight edge butts up against the nut, you'll trace a line along the edge of the straight edge. From that line, you would then use feeler gauges to determine the depth of the string slots, taking the top of the nut down as you go to achieve the proper seating depth of each string in it's respective slot. This method can be used to install any nut, but with Fender nuts that have a curved base, it's pretty much this way only.
It sounds more complicated than it actually is when you see it done. As they say, "a picture is worth a thousand words".