I just tweeted that I was learning "Mr. Jones" on the guitar by the Counting Crows. My sister was (is?) a big Counting Crows fan and said she wanted to hear me play it. My predictable response was that I was terrible and she would have to wait a long time to hear it.
It probably gets old hearing from me that I'm terrible. People probably think I'm fishing for compliments, or... well, they probably think I'm fishing for compliments.
Fact is, I've been playing guitar for about 7 months and only practice about half an hour each day. I'm slowly getting better, and am enjoying what I do. The girlfriend enjoys hearing me play, and I like learning a new skill.
There are lots of people who have been playing for years, with very basic skills, no sense of rhythm, and very little hope of improving. You could safely call those people terrible (unless they are much larger than you) without being contradicted.
If you put me beside one of those people you would be hard pressed to decide who is better. Yet, rather than call me terrible, you would probably say, "You're not bad for how long you've been playing," or, "I can hear how you've improved." The music is being judged on potential, not on it's present condition. Also, I'm probably much larger than you, although I would hope that this wouldn't colour your judgement.
That's actually fair, but irrelevant to what my skills are at this very moment. I'm okay with that, though. Look through Youtube videos and there are thousands of unskilled people showing off what they can do. Most of them are terrible, but some will get better, and some will get excellent. And they are all having fun with what they are doing at the moment.
You can't get good without being terrible at first, so you either have to be all right with being terrible for a while and work at getting better, or be in denial and think you're already great. Either way, as long as you're enjoying what you're doing, it's okay to be bad.