You need a minimum of 10% free so you do have some work to do to clear up some space.
Immediately delete items in downloads folder and empty the Trash. That should give you some breathing room.
Boot into the Recovery Drive by holding down Command R when restarting.
Run Repair Drive and Repair Permissions using Disk Utility in Recovery.
Restart
Backup your drive as a clone to an external drive. (You can't boot from Time Machine) Both of these applications can be used to create a clone. SuperDuper is free for an erase and clone which is what you will be doing. CCC requires a credit card and has a refund policy.
SuperDuper! http://www.shirt-pocket.com/
CCC http://www.bombich.com/download.html
Download OmniDiskSweeper (free)
http://www.omnigroup.com/products/omnidisksweeper/
OmniDiskSweeper will help find other large files you can delete or move to an external drive. Usually it's the iPhoto or the iTunes Library that is taking up so much space. Movies are big too. You can set both iPhoto and iTunes to launch the library on the external drive. Just hold down the Option key when launching and select the Library on external.
Info on buying an external drive
USB 3.0 drives work on USB 2.0 but you do get 2.0 speed. They are cheaper because they are popular PC drives. If you get a new computer you'll get the bump to 3.0 speed. Having a big drive will give you options. Don't think you only need to buy a drive the size of your internal drive.
I like the Seagate USB 3.0 Backup plus drives. They come formatted for PC but easy to format in Disk Utility. Seagate Backup Plus. Right now the 1T is more than the 2 & 3T drives on Amazon.
This Western Digital drive has good reviews: WD My Book Hard Drive for Mac 2 TB $99.
Locally, Best Buy seems to have the best prices.
USB 3.0 is 10x faster than USB 2.0
Thunderbolt is 12 times faster than FireWire 800 and up to 20 times faster than USB 2.0.
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