TTMT- Basement Edition (perhaps the most selfish one yet)

It's TTMT again (do you see what I did there?  With the letters?  It brings legitimacy to this very special day of the week...it's like WIWS, except everyone is helping me!).

This Talk to Me Tuesday is very 'Wilkerson Specific' but, we'd love your ideas/help.  First a story...

So, here's the thing...when we first bought this house, our basement looked like this...

Fancy Bar

Fancy Area

Then, one week before little A was born, we had a flood :( (so sad, right?!?!) and now it looks like this....

Glorified Storage Unit...

But, before you get Ra-motional (real housewives of New York- Check it!) about the state of our basement, wait for the good news...

The good news...

After getting out of debt (Thank you Dave Ramsey- Total Money Makeover- Look it up), and buying a van (which I am still lovin' on)...we now have some funds to 'remodel the basement'.  The goal is to create a playroom for all the boys God keeps giving us.  Our house is small, so a playroom will make the home totally manageable to live in until we die (if we so choose).

We are having our first (of four) estimate tonight.  I am so.freaking.excited.

Here's what we know (ish...assuming we can afford this, which is the unknown)

We would like to do dry wall, and carpet squares, knock out the bar and turn it into a reading nook, adn extend out the closet (which you can't see) for more storage.

BUT- Neither Aaron or I are good at design/creativity/etc...when it comes to space (lived here almost four years, still nothing on the majority of our walls).  SO...

Talk to me...

I need help with two things.  

1) Suggestions on how you'd remodel the space, with a limited budget

2)  Suggestions on how to properly decorate the most baller playroom ever, with a $500-700 budget (after we finish the remodel, I will get to make it a 'playroom' with that budget).  I'm talking ideas on play, storage for toys, cool things for little boys, seating etc....(we will have two couches- you can see them in the picture, but they will need cheap slip covers...I am willing to hear ideas on that as well!)

I know, I know, not the most fascinating TTMT, but could you hook a sister up and suggest some things?  PLEASE?!?!?!?!