This is an update for all the questions that I have gotten!
You can see in the photo the regular medium Vanilla envelope was sealed and (holding it portrait) using the tag punch, punch out each side, leaving the flap in the middle as a handle. I actually can get down one and a half punches to make the handle longer.
Trim the outer 45 degree angle left from the tag punch off to square off the outer edge.
I could have just explained it, but a photo is worth a thousand words!