If you're reading this then, you are - in some misguided way - just enough of a narcissist and juuuust enough of a masochist to want to pursue this line of work. My first suggestion? Get out now while you still can. Run for the hills. Get a bachelors degree in something like carpentry because at least you'll get a table out of the deal.
I've been doing this for six years. It's been, in equal measurements, both incredible and frustrating. I've been able to travel all over the world and have some incredible experiences doing what I do. I've also lived off of couches and food stamps when it got real bad. Y'gotta be prepared for both.
I wouldn't change it for anything, though. My jobs is to be curious and to learn and to teach other people. You can't say that about many other gigs.

What are the steps someone needs to take to become a freelance writer?

The Catch 22 about starting this kind of career is that you need to have done work in order to get work. There's a couple of ways around this. One of those ways involves a duffel bag full of unmarked dollar bills.
1) You should try and reach out to a lower rung site that will run your work. If you can't find one, write on your blog. Lower rung sites are popping up all over the place these days.
2) Don't be too hyperbolic in your writing. This will pigeonhole you later. Have a voice, but don't be a pundit. Unless you want to be a pundit. In which case, fuck you. There's a trend right now about being VERY hyperbolic for the (largely Facebook) audience. Stay away from that. Write for yourself. If you find yourself being hyperbolic, ask yourself why.
3) When you email an editor, send them a couple of clips of your work. Either from your blog or lower rung sites. KEEP YOUR EMAILS SHORT. No fucking editor wants to read a 3-page dissertation on how great you think you are. Keep it under 8 sentences.

4) Make yourself aware of payment, payment policies, and how hands-on your editor is.

5) Pitch stories. Three of four sentences a pitch. Figure out why a reader might want to read your piece, not just why you would.

6) So someone didn't like your pitch? Send it elsewhere.
I've written every day for the last six years. The key to success in writing is the key to success in general: Practice, practice, cocaine. Wait. Location, practice, cocaine. Something like that.  My friend Erin Gloria Ryan over at Jezebel got her job there because she had hilarious comments on the site. The editors noticed it and offered her a job after a while. You never know who's looking.

What are startup/education costs?

Buy a laptop. Read everything. Read things outside of your comfort zone. If you're a straight white guy weaned on Bukowski, read Roxane Gay. If you're a straight white girl who checks social justice websites every day, read Bukowski. I think you can learn from everybody, especially people you don't agree with based off of often misguided "principle."
You'll learn a lot about people that way; the human experience is both lonely and thrilling for pretty much everybody. Find out why.


What is the pay like?

It's sort of like being a trade fisherman: some days are fantastic and you get a huge haul. Other days you don't even get a bite. You'll get stretches of feast and famine so it's best to prepare for somewhere in the middle.
The work, if you really think about it, is not vastly different than waiting tables. You're the public face of a establishment. If you work at a high profile restaurant, you make more money. I make enough money to just about get by in a big city, on the low-end of comfortable, and I'm pretty happy with it.
I've freelanced for the likes of eBay and Motley Crue before. You never know when your services will be needed. It's best to keep the door open to doing whatever. You learn that way.

What are the best parts of being a freelance writer?

You get to learn about absolutely everything. If you're a curious person, which you absolutely must be in order to start this as a career, then you basically get paid to have fun and learn. You get to let your mind run free and explore.
Also, some of the experiences you get - be it interviewing a celebrity or traveling to far off lands - are second to none. It makes all the negative aspects worth it. You might be making half the money of everyone else at the dinner party, but you'll have the most interesting stories.


What are the biggest challenges in being a freelance writer?

This might look like a long section, but to be completely honest, the challenges are what you learn from. They're not bad things.
There's a strong possibility of becoming very bitter. There's a lot of work for very little money, watching your peers advance ahead of you either in their careers or simply in life, or sometimes just long plateaus where you're getting work but not the kind you like. On the flipside of that, if you get a lot of work, you can burn out quickly and lose the humanity in your work. Remember Daniel Day Lewis in There Will Be Blood? You could very easily turn into him: looking to step over whoever to get what you want. It's easy as a freelancer to over think money - in good times and in bad.
You kinda have to be a combination of Ratso Rizzo and Arturo Bandini. Constantly selling yourself and believing in yourself. There's an alarming amount of balance between not caring what other people think about your work - after all, it's your art - and caring about what an editor thinks and being malleable enough to pivot your brain on a dime.  The phrase "Kill your darlings" is especially important. You have to learn to kill those things you love in your writing for the sake of the greater good.
Another challenge of freelancing - or writing in general - is finding a good editor. A good editor can really make what you do pop, can make it work, and can make your writing electric. In my six years doing this I've had maybe two editors that were worth writing home about. A great editor is far and few between. Finding one that believes in you enough to put up with your artistic temperament? Even rarer.
If you write for certain places or have even an inkling of an outspoken opinion, there'll be days when you step into a hornet's next and get an avalanche of hate. You have to learn not to take it personally; that you most often are no more than a temporary lightning rod. Someone doesn't like your article? Fuck them. A whole lot of people don't like it? Learn from it. Never be too proud to learn. But you have to learn and you have to adapt and you have to pivot and you have to stay in the moment and not stay in your head long enough to let failure affect you.
I guess, above all, though, is to have fun. Go to the unknown and learn about it. Be fluid and go where the stream happens to take you. Learn how to get back to yourself but don't stay inside yourself too long otherwise you'll never learn about the outside world and how connected the human experience is. Be passionate about everything. Travel! See the world! You can work from anywhere.
It's oddly zen.