You can do it all by hand moving nodes.
You can research using the warp and bulg feature in Inkscape.
There is a font collection called Harold's fonts that somehow do this.
I have never made one so am not certain, but someone else may lead you to just the perfect tutorial for this.
If you don't have Word, Open Office.Org is a free program that also has the drawing option, this program does everything MS Office does. http://www.openoffice.org/