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My 2 cents.
I got my break by doing freelance work for friends that had an agency. I charged them way below market value because my skills were green so it took me longer than someone who had been doing it for years. This also meant that I didn’t have to worry about designing, but I did have to learn how to slice photoshop files correctly, and what had to be an image, and what could be done with HTML. Because the work was designed professionally I was able to build a decent, yet small, amount of work to shop myself around. I didn’t want to freelance though, because I wanted the experience of a company, and hopefully the mentoring of a senior person who could teach me workflow, techniques, advanced languages, etc. I landed an in-house job for a real estate company, which was a great starting point. With more experience and more work under my belt I transitioned to a Design Studio. I still flirt with the idea of full time freelancing, but I enjoy the stability of full-time work, and I have to be around people – working from home all the time would suck.
Look into non-profits in your area. If you need to build a better portfolio, you have to find clients. Spec work is okay, but published work is better, even published work for a non-profit that couldn’t pay you. Look at Churches, animal shelters, local Heart Association, Cancer Groups, etc. When I started I worked a full-time job during the day, took night classes, and did free-lance projects when I could get them.