Knowledge vs. Wisdom

A few days ago, a lady at my work asked me what is the difference between knowledge and wisdom. Most people i think would try to give the same answer for both, which is knowing something. However, I answered with knowledge is knowing something through memorization, and that wisdom is applying the knowledge. This conversation went on for a little while, and after she left, i started questioning what was wisdom and knowledge. People use those terms almost interchangeably. People say that wisdom is passed down from generation to generation, but in actuality, under the definition I gave, then that would be knowledge, because you are not applying it to YOUR life.
According to the dictionary, knowledge is information gained through experience and education, or the knowing of theory or application. This is basically more or less I read a book, I memorize the contents, I gain knowledge. Many people when they go through school gain knowledge, because that is what school is about. They make us memorize stuff, and teach us how use machines, but they don't teach us the application of the knowledge.
Wisdom is defined as the quality of having knowledge, experience, and good judgement. But wait a minute, doesn't that sound like knowledge? Actually, notice that it says good judgement ans experience. Knowledge is something you gain through books, and its the theory on how to use it. Wisdom is actually using it in real life applications.
So how does one gain wisdom? I believe it can comes from experience and application of knowledge, but it can also come from ones personality. I'm not saying its bred into someone, but it one personality could affect how they use knowledge. A person with a positive personality will gain positive wisdom, like how to survive tough situations, and little tid bits on how life works in a positive way. A negative person may gain "negative" wisdom, such as being cynical and sarcastic on how they got cheated. Although "negative wisdom" may not seem like wisdom, I think a person can express wisdom negatively.
So, now may i ask you:What do you think wisdom and knowledge are?