PonyOne once said "I noticed that everytime i got new gear, I sounded lightyears better". then mentioned his change from Bottom of the barrel Epiphone SG to a Gretsch. That's a huge difference, Epi SG to a Gretsch...
(by the way ponyone, i'd like to know what model and year your gretsch is!)
When i moved from my Squier Affinity Strat to my Gibson Les Paul, the world opened up for me in more ways than i can tell you.
In conclusion,
crappy gear = low self confidence = low levels of progression = possibility of quitting real quickly = waste of money.
See if you can get something better than that hunk of junk.