Step 1: Materials Needed:
Paint(I use acrylic, whatever works on fabric should work for you)
Some sort of brushy thing
Something to stencil
Step 2: Stencil
One of the great things about freezer paper is that you don't have to worry about islands. Since you're ironing on the design, you can just place any white bits that aren't connected to the main part of the stencil. This is a good thing, as my stencil is sloppy and has a lot of islands. You can also iron on corrections if you mess up somewhere while cutting it. The downside to this is that most freezer paper stencils can only be used once, but if you're careful and don't use islands you may be able to peel it off intact, though it probably won't stick again.
Hokay, so: now, you either have your fancy smancy stencil drawn, or ready to print onto freezer paper. You can probably buy freezer paper at a market or maybe an art store or some place like that. I'll bet the Reynolds company makes it, I don't know what it's actually used for, there's a roll in my house and I stencil with it. Anyways, whatever you do, make sure your stencil is on the plain side of the paper, with the waxy side down. WAXY SIDE DOWN.