What sort of bike are you looking for? In terms of this bike I would ride it as is and save your money towards a more practical bike. This was a low initial cost bike with cheaper components nothing really exciting for upgrade. At most I would maybe put on some nicer wear items like brake pads and shoes and maybe some touch points I could move to a new bike.

In terms of new bike a Specialized Sirrus X 5.0 or 6.0 would be a nice choice and a good upgrade but a 4.0 would still be decent or the Jamis Sequel S2 is a neat bike or there are others out there. Basically look for 10 speed and above, hydraulic disc brakes, a carbon fork (or a high end gravel suspension fork like the Rudy from Rockshox, 32 Taper Cast from Fox or something similar) and look for stuff of known quality and quantity and you will generally get a decent bike. 7-8 speed stuff came out in the late 80s early 90s so nearing the 40 year mark so anything newer in that will be lower and lower quality as time marches on. 10 speed still has some decent stuff and especially with Shimano CUES and Microshift AdventX/Sword you have a lot of options for low cost but quality drivetrains in 10 speeds and above (in the case of CUES).