How to play in this situation....?

[Se7enTwo]

Ok. I've been playing online play chips for about 6-7 months...watch as much poker on TV as I can get.
I still consider myself a new player...although I am learning. I'd consider myself a smart player.


ANYWAYS.

Here's the situation. My first real life-real money game. $10 buy in-winner take all.
Out of 8 people my newbie-butt makes it too heads up....but thats where it went wrong.
The blinds were 500/1000. EVERY pre-flop the other player would raise to 2600....and I just wasnt getting the cards.
Finally I got aggrevated / tired and went all in w/ a draw hand & lost.

So. How do you handle this situation? Keep folding the blinds out till you get a somewhat decent starting hand?
Or.....