Just keep the current bike as a fun bike. Find a decent condition, older steel framed, rigid fork MTB in Craigslist (they can be had for <$100 depending on your luck), add a Trekking bar, racks, fenders and you're done.
Here's mine

I still have to rig up some bottle cages and buy a new pair of pedals, but so far I have spent $200, including the bike. Add-on parts are mostly bought from ebay and LBS.

If you must use the current one, I say, just buy a Trekking bar and racks.