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If it were me, I'd buy a Squier Standard Tele and a Superchamp XD or a Vox AD30VT. If you could get a shop to price match one of the big online retailers and maybe throw in a gig bag and a setup on the guitar, you could come out at $500 and have a really nice setup.
I think that the advice to spend more on the amp than the guitar is solid--the Squiers are really good guitars and almost any decent guitar will sound good through a good amp.
Let us know what you decide and how you like it.
Cassady
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