One of the biggest challenges I had in becoming remotely proficient was building up a cache of songs big enough so I felt comfortable playing with others. It's tough. You can spend a couple weeks learning 3 or 4 songs in the same tuning, and the next thing you know the A part of Angelina Baker is now being played by the B part of Fortune. Here's a couple tips.
1. Listen to all the music you can.
Pick a song you want to learn and listen to it over and over. Don't look at the tablature until you can hum the whole thing to yourself walking down the street or driving to work. After learning enough tunes you will recognize certain phrases or 'licks' that are used over and over again. Otherise just throw on records and not worry about learning them. Tust me, if you are listening, you are learning.
2. Attack the hard parts.
Can't seem to get that second Galax lick down Pretty Little Dog? Or maybe a particularly tough double thumb? Pause and take some time to practice by repeating the whole measure or two over and over until you hate it and are nauseous. You can do this absent-mindedly while watching TV. Your muscles WILL remember, but so will your wife.
3. Practice songs you learned earlier before jumping too far ahead.
Sit down for a session and run through the songs you've learned regularly. It's a great way to warm up and keep those songs fresh in your head. Try to alternate tunings and keys as well to get used to changing things up.
4. Don't marry yourself to just one version.
My biggest frustration in learning songs by ear and tablature was picking up on variations in the tune from player to player. The tab you learned may be slightly different than that guy on Youtube who plays it different then that gal at the jam. This also ended up being my biggest help. Though phrasing and approach can be different from player to player, they will both generally fit into the same structure and sound okay. Pick out phrases you like from one version and use those in place of "so-so" phrases from another version. Trust your ears.
5. Have fun.
Seriously! Try to find an open jam near you and get to know some people who are also enthusiastic. Nervous? All the more reason. People are generally nice and the old crotchety ones are also the first to take someone under their wing. Checking out a local old-time fest is probably best way to meet people and get down to jamming. No doubt your brain will absorb more in one night than in 2 weeks of playing alone.