When I'm not using real heavy thread and I have a lot of room, I like to go back 3 and up 1, clip the threads, and then maybe take a needle and run a little bit of FabriTac or even some clear nail polish to the threads I just cut. That helps lock them in and prevents them pulling out and leaving danglers.
I'm not sure that there is any right or wrong way. I used to just go back two like lots of folks do but I changed. Nevertheless, I could easily do back-2 and it wouldn't bother me.