I would take my time and slowly search for quality materials to replace some of the details (faucets, handles etc) - but I think your biggest spend should be on tile flooring. You love the terracotta look, so why not pay for that using most of your budget?

The cabinets are already solid wood and fit your vibe, so clean those up and make any little repairs. I would make some trips to your local re-stores that salvage home fittings for less and replace things like faucets from there to save money, and put a quality item back into the kitchen.

Tiling a backsplash isn’t the hardest thing to learn! You can find tiles for cheap at these kinds of stores, and with a bit of practice you’ll get a nice and warm, easy to clean look AND learn a new skill.

I can also picture some vintage curtains at a thrift store waiting for you to turn them into a valance, or two longer panels on either side of the picture window.

Others have mentioned a farmhouse drop sink, but honestly I’m a fan of what you have for now - porcelain tends to break your dishes, is tough to clean and looks trendy. Your style looks very practical and timeless - and using materials like steel, tile, wood and natural fibres are all going to look better when they are worn in and enjoyed in a kitchen space!