Start a new document and fill the background with black. Select the type tool and create a white text.

Now to create the flames, select the smudge tool and choose 17px soft brush. For strength, select about 80% - 90%. Check the "Use all layers" checkbox.

Click on the to open the Brush pannel, and apply the following settings "CLICK TO VIEW"

Now create a new layer, then smudge the top of the letters and other areas to create a flame effect.

Click on the Adjustment Layer button at the bottom of the layers pallete and select Color Balance (SEE) . Use the following Settings:

Midtones: Red= +70. Yellow = -70
Shadows: Red= +70. Yellow = -70
Highlights: Red=+70. Yellow = -20

You can experiment with these value to get better results.

Set the new text layer's blending mode to Overlay.

Your done! Play around with the blending mode and opacity for more cool effects.