I'm doing it like this, but I skip the paper part.
I cut the freezer paper and the fabric I want to use the same size like a regular piece of paper.
Sometimes the fabric gets stuck, which is not a very pleasant experience. Now imagine that litlle piece of fabric that she is using will get stuck. Oh no! It's even harder to get out!
Thanks for sharing, this is really a good advise to do labels. You can enhance it in many different ways!