Okay, so.....you want to replace all of the furniture we see in this room?
Have you ANY idea what your design style preferences are?

To me having the brick continuing from the outside would always look like this is an addition, and I would opt to cover it. You could drywall in the sides up to the hearth and cover the brick close to FP with stone of tile, or you could cover the whole wall like in this pic.
http://houzz.com/photos/323249

Thanks and yes I want to go to a contemporary style of furnishings. I don't really like the yellow brick

OK, contemporary! Excellent. It would be a massive undertaking to take down all of that yellow brick, and a good chunk of your budget to have the entire wall covered with large stone, porcelain, marble, or other man made faux stone, but it would be gorgeous! And you could leave the bricks outside alone!
Not nearly as expensive would be to choose a wide plank wooden flooring and run it horizontally across the whole wall, except for a small amount of stone or tile to face your fireplace in keeping with fire code standards. I've seen this adaptation of flooring and it really does look modern & contemporary and really beautiful! You can also see about a few "floating" shelves of various lengths on that wall, which would be another lovely contemporary/modern touch!

I'd concentrate on getting rid of all of the brass in the rest of the room too.

A tribute room! To the '80's. I hope this is the MLS furniture, and not yours. Paint it and the extension outside charcoal gray or black for some drama.

We also think that painting the brick would be the ways to go. White or Charcoal grey, depending on the color of your furnniture. Doing so will leave you with a lot of budget to complete the makeover as you would dream it! And get rid of that brass door.

While you did not mention your style preference, I will suggest an option to bring warm, cozy yet modern styling to your home.

My suggestion is to update with a light upscale French Country styling. I would remove the brass enclosure, and consider updating with an 8 foot long Rustic Large Hand Hewn Solid Pine Beam mantle which will beautifully break up the width of wall. You can choose to place direct on wall for contemporary styling or choose to add thick metal decorative bracket fixtures to hold beam in place for an added country or rustic effect.

I know that you were feeling uncertain about changing the color of the brick since it matches the exterior, however you absolutely could, and I would suggest you should. It would break up the spaces and add interest, You could still stay light by choosing a neutral color like a mushroom grey or go bold and choose a darker color ie slate, for added focal point attention.

Keep the space light with some off white or neutral furniture. Use throw pillows to add touches of color. Add some beautiful airy plants in glass, or perhaps some topiaries in stone planters.

There are so many great furniture and fixture suggestions on Houzz so, once you select your fireplace and room style, have some fun selecting your favorites!

Have you established a maximum available budget for the living room?

Do you have the same flooring in the room as you do outside the room? No, of course not, so don’t let the brick wall make you think you can’t paint it

Not a Pro.

I understand why you believe changing the color of the brick in the room will effect your visual with the outside brick being on the same wall. I believe you can work with that color brick in the home.

Put together a mood board incorporating the brick color in your design for the room. See if this works for you.

I think that room has great bones for a contemporary look. If it were mine, I’d choose a paint color. Then add some type of “mantle” or floating shelves extending to the left of the fireplace opening to draw ones’ eyes away from the outside brick.