When the first color coat is dry you can begin the masking process. I use a thin 1/8" wide piece cut from a larger strip to do the first masking. I cut this piece with a sharp blade on a plate of steel, some use glass, either will work. I use Scotch Brand 2090 Long mask in a 2" wide by 60 yard roll. This 2" tape is wide enough that a complex shape such as the nose of the Southern cab units can be cut from it in one or two pieces. I still trim it so it is no wider than 1/4".I put a piece about 8-10" long on the steel plate and cut the 1/8" wide pieces from that. A narrower strip is easier to form around ends cabs etc on an engine shell. I sometimes use several short pieces of the 1/8" tape to complete the first masking line. When this first piece is burnished in place I use pieces about 3/4" wide placed on masking paper first then to the 1/8" wide strip to cover the remainder.
Masking paper can be had at an auto supply store, a roll is about 12' wide and seems like miles long. In any event it will not bleed thru. Ordinary xerox or typing paper can be used as well. The Scotch Brand 2090 can be bought at most paint stores. There are other low tack tapes that will work. I don't recommend using "masking tape" or pressure sensitive tape. Drafting tape with low tack can be bought at most drafting supply stores. I have left the Scotch Brand 2090 tape on a model for a week to see if it would still release, it does. Other tapes should be pulled as soon as possible to prevent interaction with the paint.
Spray the second color and set aside to dry. When dry pull the larger strips and paper off first. Use a knife point and lift the end of the 1/8" strip, pull back over itself to prevent picking the paint and ruining the paint..
Repeat this process for the third or fourth colors.
Another step can be done here. Spray the entire model with "Future Floor Finish". This is not a "wax" but a clear acrylic which drys in about 10-15 minutes(with heat from a hair dryer) and gives the decals an absolutely smooth surface which to adhere. Sometimes when decals are applied to the bare acrylic or other paints the decals will "silver" ie; they don't settle down completely even with repeated coatings of decal setting fluids. The "Future" will eliminate this problem.
When all colors are on the model and are dry, you are ready for Part 5, applying DECALS to the model