The picture shows the freezer paper. It is important you get freezer paper (which is waxy on 1 side and not on the other) and not wax paper (which is waxy on both sides). If you use wax paper, it will probably mess up your iron and make for a bad situation.
You should be able to find this stuff at Walmart or any grocery store. Possibly also at craft stores.
Make a design you like, and print it out on normal paper.
Put freezer paper over your printout and trace the outlines of your letters or design with a pencil. Make sure the freezer paper is waxy or shiny side down.
It helps to tape or staple it down. If you're stapling, make sure you don't put the staple too close to your design, or it will allow dots of paint to get on your shirt!
Use an X-acto knife to cut out the letters. Make sure to save any pieces that are completely detached, but are part of the stencil, like the inside circle of an O.
Iron your shirt or fabric, and position your freezer paper, waxy or shiny side down, on your fabric. Make sure any loose pieces (none on this pattern) are waxy side down too, or they will stick to your iron!
Iron on with a high heat, no steam setting.
Paint over the holes in the stencil with fabric paint! I did two thin layers of Tulip soft fabric paint in Gold, and it was plenty.
Let paint dry completely! I let the shirts dry overnight.
Peel off the freezer paper.
The paint sticks really well to the fabric, so just rip it all off! Make sure you get all the little pieces of paper!
Be careful on this step if you have very delicate, thin patterns.
Wear and enjoy! :)
According to the bottle of fabric paint, you can wash inside out after 72 hours.