Another option:

First, I think Chip has the best method in my 1 boat experience, however you may have other tools and not want to buy anything.

I used the pilot hole method as Chip recommends, but used an "old fashioned brace and bit" for the final hole. Also, after the 1/16 hole, I went to a 1/8 " hole to better align my holes. The slow moving (with me driving it) auger slices a sharp circle to define the circumference of the hole. Then the chisel part of the bit removes the contents of the hole. I did it without problem.