I may sound like Pollyanna, but to me user experience design is a way to make the world a better place.
OK, so it's not like we UX folk are curing cancer, or finding new sources of energy, or stopping world hunger… but what we do makes a real difference in people's lives. If you can make an application or design a system that makes people's day-to-day existence just a little better, reducing stress and/or saving them time and money… that's making things better, one small interaction at a time.
One of my most successful design projects was redesigning the way people signed up for electronic bills through their banks, letting them "go paperless". By simplifying the process and better explaining the value to customers, we increased adoption by a significant amount. This lead to costs savings and increased profitability for my company and it's clients, but also reduced clutter in people's lives and saved thousands of acres of trees that would have been turned into billing statements otherwise. A big win all around.
How I design starts and ends with the same thing: data. Sherlock Holmes famously said "I can not make bricks without clay!" referring to his inability to solve a case without facts, and I have a similar need. Who are the users? What is the core task they are trying to accomplish? What are the business goals of the group I am designing for? Where do they use the app/function I am designing? And so on. I can't start without knowing some key things like the above.
When it comes to how I approach design, I use a "rigidly flexible" process. The general process is consistent – research, sketch, test, refine, document – but the tactics change depending on the project and timeline. I've written a lot about these tactics here and on my blog josephdickerson.com, and instead of repeating myself recommend you check my writing out for some specific details.
And finally, when it comes to design tools, it's not the specific tools that make you a good designer… it's how you use them (and making sure the tools "fit" you). An amazingly talented designer who uses a tool that is difficult to use or doesn't "suit" him or her can produce bad design, because the tool "gets in the way." Try out as many tools as you can to find the ones that work for you.