If you want to avoid baggy skin as you lose weight, it is pretty helpful to include weight lifting/circuit training. This type of exercise seems to help build both muscle and connective tissues, which tighten the skin as you lose weight. I can tell you that the loss of 60 pounds, from 207 to 147, for a person of your 5'3" did not result in baggy skin for me with my weight lifting/circuit training and walking regime.
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