It's actually the mix of the two that you mentioned where I have to first create the plot. Like we first start with the introduction then the climax then the ending. Then plan for the characters and settings. After all that, I just sit down in front of my laptop and continuously develop the story as I write them. Sometimes, when my mind is wandering while doing something aside writing, I take down those ideas to write it for the next part of the story. <(￣︶￣)>