Take heart, Kat! Remember: you didn't gain it all in a few days, months... it may have taken YEARS. So focus on the same type of baby steps, but only in the other direction. If you can lose a few ounces a day, that will translate into pounds each week. In a few months, or a year, you'll see a big difference.
Also, don't let water retention make you crazy! Just ride it out. It's temporary.
A law of physics is this: if you burn more calories than you ingest, you cannot help but lose weight. It's a fact. Diet is WAY more important than exercise! Exercise is great for developing muscle tone, but crappy as a weight loss method. (Ever notice how efficient our bodies are? Ever watched the "calories burned" counter on an elliptical or stationary bike at the gym... at the same pace that paint dries?) By all means, stay active! Movement is life! But it's all about the calories. (Carbs are just a different form of sugar, ultimately. But if you must choose between carbs and sugar, choose the carbs, because the body must convert them before using them, making them actually "cost" energy to consume.) Ultimately, though, it's calories.
</unsolicited advice>
Best of luck!!!