How to set up a guitar is such a source of worry for beginner guitar players I have uploaded an e-book called Basic Guitar Set-up 101. It is a tutorial by Charles Tauber on how to set up your guitar to maximize your guitar playing experience. Whether you have a steel string or nylon string acoustic guitar or an electric guitar you should download and keep this little tutorial. You can get it here.
And here is a video on setting up an electric guitar . . .
