Stuck in the late 60's basement family room
45 yr old family!!As you can see from the picture we need help with this room. As you can see we have large windows and paneling (Yuck) which we can't really afford to rip out at this time due to reno's done upstairs budget at a minimum now. I think we are going to paint the panelling but need help as to color, window covering, what to do with floor (tiles now) and the fireplace. I would say the upstairs is transitional as far as style goes. I would like to go for a relaxed feeling down here as this is where we watch tv etc.

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1. Yes painting the paneling white will really help you love this space. I would add some larger molding also to give it a nice finished look in glossy white.
2. Fireplace surround. There are many options here create one out of molding, buy one on ebay or craigslist, or go for new at the depot. Build up that nice focal point of the warm fire. Also a mantle gives you something to decorate. I would probably build something out of white molding. Put up a few candle sticks (or other what nots) and a framed piece of art and boom instant cozy.
3. Ceiling to floor curtains in a warm tone that you love. It looks like the one window in the corner may be challenging to do as it has an over hang but no worries just be sure the curtain goes all the way down like the rest of them and it should be okay. Or maybe curtain off that whole corner with a curtain running from fireplace to window wall...I would have to see more pictures of that area I think. I would probably do faux velvet in a dark purple. But that is me. I like the idea of a nice warm texture here, go with a solid though as it is a bunch of window.
4. Killer area rug in a low pile sandy brushed vintage look. I would pick light greyish silvery.
5. Comfy soft couch , I would do a greyish color here with purple pillows.
6. I would probably paint the tables bright white and add a wood or marble top in a greyish to the coffee table. Or replace with a rounded edge one you love. I am thinking metal with wood top. Restoration hardware looking.
7. Floor and table lamps within arms reach of the seating surfaces. I might even add a piece of chair rail type molding to the edge of that upper panel wall that sticks out, I would mount the molding so it is partly covering wall and partly hanging down below the wall to give room to tack a strip of rope light tucked in behind it to shine warmly down the newly painted white paneling.
Have fun thinking outside the box! I found a nice before and after web site that might give you some ideas...http://www.betterafter.net/
Rather than white why not try a soft yellow to give the illusion of sunlight coming into the room? Something like 'Fun in the Sun' by Ben Moore with fresh and happy: http://www.benjaminmoore.com/en-us/paint-color/funinthesun
Be sure to use eggshell or semi-gloss paint so it reflects the existing light.
Paint the trim high gloss white.
Use gray, black or blue as an accent color. You could paint the rocker, coffee table and end tables to go with the new look.
Add a fun rug from Ikea and no sew panels: http://www.shanty-2-chic.com/2012/06/easy-no-sew-window-panels.html
or
http://www.allthingsthrifty.com/2010/04/only-way-to-make-window-curtain.html
Put the rocking chair, a painted bookshelf (look at thrift stores, yard sales, consignment shops and Craigslist for used pieces you can incorporate) and a lamp in the little 'den' for a place to curl up with a good book.
Position the sofa perpendicular to the fireplace with the blue chair centered across from it. Place the TV opposite the fireplace. With the rug, a few throw pillows and a throw or two it should be a ocmfortable spot to relax and watch the telly.
Hope to see updates!