Your problem's a familiar one! I lost 60 pounds last year (long story) and NOTHING fit anymore. So... whole new wardrobe. I found YLF while trying to figure out how to be cost sensible and stylish. I have a casual lifestyle now and transitioned out of a working wardrobe four sizes larger than the one I have now.
My advice falls in line with what you've already gotten. You need undergarments that fit the new you. Not only will your new clothes fit better, but it's quite lovely to be wearing underthings you enjoy. I splurged, to be honest, on bras and camis. Well worth it.
For myself, I find tops more forgiving than bottoms, so some of my older tops were able to stay the course. Baggy pants, not so much. Each time I went down a size, I bought a new pair of jeans and practically lived in them. Only recently have I bought other styles of pants. Black pants, a pair of summer weight/color pants (or winter, if that's your season), and jeans can get you through most of your fashion needs during transition. I would buy new. Alterations might be worth it if the garments are excellent and you are certain you won't go down another size. The suggestion to look at less expensive brands while making the transition is a good one! I love designer jeans, but while losing weight I bought Land's End. On sale.
The next order of business after pants was tops. When starting from scratch, pants can be very basic, a foundation, and tops can be where you let loose your sense of style. I started my rebuild during winter, so bought a few nice sweaters: black, gray, and a pretty cerise that brightened things up. At least one item should be something you absolutely LOVE. Buying only practical things can feel... boring, I guess. It would be sad to resent the rebuilding process.
If your climate gets cold, you'll eventually need to consider outerwear. I certainly did. I toughed out our frigid weather in my too-big coat and just bought my new winter coat last month, well into spring, at a huge discount. I used my savings to buy a few nice summer things.
Hope you enjoy dressing your new you!