I set my vcarve  to .3 and my mach3 safe z to .2 . It cuts the letter then move to the next letter and carves a .05 grove as it move to the next cut. 

Anyone ever have that problem?

Dave

Depends on HOW you specified the safez to be in Mach3. Work height, Machine value or incremental move

But from here looking at your moves the safe Z is LOWER than the cut height.

Just a thought, (;-) TP

so I need to try setting my safe z higher?

Is it really Machs safe Z that is the issue? From what you are saying it sounds like its your code that the problem is with.
Hood

Safe Z should have no effect while g-code is running.

From the sound of things, you may be losing steps when the router is retracting. When it's cutting the .05 deep groove, what does the DRO show? If it show .3, then your losing steps. If it shows -.05, then your code is wrong.