First map out how much you want to spend on upgrading it. (New neck? Min $100-200, Tuners? $26-100, Pickups? $150, Refinishing supplies? $100-200, Consider a new Nut since the squier is plastic, $10-50)
At this point we're looking at putting $400+ on a Squier. No one recommends this. But I say go for it if you have it.
www.guitarfetish.com is the best place for cheap but quality upgrades.
For the price you could get a much better made guitar used. Then plan on upgrading that instead. Course theres a big difference between buying parts slowly and buying something all at once. As for selling and building a custom for $100ish... Not going to happen unless you go Saga kit. And it would probably compare alot to the Squier.
My tips :
1: Don't throw away any parts, even if they're rubbish. Just because you put in new expensive pickups doesn't mean that they have to live in that guitar forever. What if you get a better axe down the road and want to move the pickups over? You could de-mod the squier and upgrade the new axe for no extra money. I know alot of people that put emg's on everything, they have 15 yr old guitars that they never play anymore but sure enough it has EMG's on it. Each time they get a new guitar they buy a new set of EMG's. Talk about wastefull
2: Buy from Guitarfetish to save cash. Don't go for the top of the line stuff. You don't need 200 dollar tuners on a $100 dollar guitar. It's just silly.
3: Start off slow. If you get frustrated doing something, put it down and walk away. Come back to it later. Trying to finish it quickly will cause more harm than good.
4: Read, read, read, read, Take notes. Then when you get to work understand that all the reading in the world doesn't compare to actual hands on practice.
5: Don't be afraid to fail. You only truly fail when you give up and never go back to it.
6: Don't let other people talk you into more expensive routes. Wan't to upgrade your Squier? Go ahead. It'll never be a True Fender but who cares. When it comes down to it theres not much difference. If you were to upgrade all electronics and hardware on a Squier, and on a Fender. Then cut the headstock to be the same and re decal the squier. No one will be able to tell the difference. Hell upgrade the Squier to Fender parts and cut the headstock. Some can tell by playing on the neck. But the difference in the body will be minimal. Better wood grade(Which doesn't matter if it's a solid color) and tighter tolerances in routing. I actually like my Squier's neck more than any fender I've picked up.
7: Have fun.
Here's my modded Squier. It originally had a cream pickguard/tone knobs/pickups. All upgrades are from GuitarFetish. I've added roller saddles. Black Pickguard, 17 combonation switch setup. killswitch, GFS Lil killer Rail pickups, Dunlop Straplock, and a Tremol-no.
My next mods for it are locking tuners($28), wilkonson Tremolo($50), Black hardware, Roller Trees, Graphtech nut, Push\Pull Tone knobs, Overdrive Circuitry. And i'm going to convert it into a fat strat.