Hey Julian, welcome to the forum.
I also started cooking and getting interested in better kitchen knives when my family didn't have good knives and I didn't have a job or a way to afford good knives of my own. We didn't have a lot of money, so when my mom finally spent $20 on a small chef's knife, it was the best kitchen knife that I had ever used. It had a simple, thick grind and poor edge retention, but it served me well for many, many years (and it's still around).
Look around at some of the threads that talk about "thinning behind the edge" and restoring old knives. With a little effort and practice, you can make even a cheap, simple knife perform pretty darn well. The nice thing about cheaper, softer steel is that that it's much easier to abrade and shape and you're less likely to chip or seriously damage a more expensive knife made out of thin, hard steel.
The fancy water-stones that people talk about on here are also most useful for very hard, high quality steels, and actually might not work as well on softer steels. What would probably be best on your knife is what people call a "toothy edge" which is created quickly using pretty rough abrasives.
Have you seen any of Eamon's videos? They are a great place to start, but even some of the hard-core geeks on here still find stuff in them to learn from:
[video=youtube;lqsbO1w8rXE]http://www.youtube.com/watch?v=lqsbO1w8rXE[/video]
One more thing about cheap knives when you're first starting out is that they get dull faster so you have to sharpen more, so you get more practice!
Here are a couple videos that show what can be done with free, readily available things like a cinder block or cement step or a section of curb, a brick, cardboard, and an old belt.
[video=youtube_share;CXLaE1JvQ94]http://youtu.be/CXLaE1JvQ94[/video]
[video=youtube_share;wSzq45W0LTk]http://youtu.be/wSzq45W0LTk[/video]
Because this is kitchenKNIFEforums, a huge emphasis gets placed on having awesome, really high performance knives. However, you can learn all of the most important things that you need to from simple, cheap, and even free tools. Being able to get good results with a cheap knife all by yourself will put you far ahead of someone who just went out and bought a new knife and then had it professionally sharpened.
By the time you get your first really nice knife, you will already be a bad-ass and the coolest kid on the forums
irate1:
