Get the repairs done - go to Home Depot with your pics. I bring a lot of color with wall art. I love it and it makes me feel good. Also, huge colorful wall art is a conversation starter. Go huge with the wall art. That's what I do. Get prints and have them framed locally with plexiglass (safer because it's ligher to hang). Get Custom made glass tops for your side tables. That'll let light bounce all around. Also put a mirror on the wall. Other places you can put mirror or glass are (first make sure it'll go with your decor), lamp bases, etc. Accept the paneling and paint over it (the same color as the wall). Lighting is often seen as an after thought, however, it's crucial to create an atmosphere in the space. Minimum - table lamp or wall sconce in each corner at chest height. I like a very well lit room, but not everyone does.

Wow thank you for these ideas @BeverlyFLADeziner! i do have plans to mount the tv on the wall opposite the couch so that will free up that corner where it currently is. can i ask why you suggest putting the chair and ottoman next to the doorway vs. in the corner it is in? and just clairfy, do you mean turn the rug 90 degrees or 180 degrees? 🤔

Instead of removing it, it might be easiest to paint it all white. That will open up the living space and not accent the low chair rail. See photo attached.

The rug should be 8x10 and I'd run it the length of the room. See how the rug is depicted in the floor plan I posted for your.

I now can't tell if the area rug you have is square or rectangular.

I'm in the paint it all white camp. It will help alot.

Bulky overstuffed furniture always makes a room feel cramped and smaller. If you are not in the market for all new furniture I would at least get rid of the arm chair and ottoman and swap it out for a smaller arm chair. Do you have another arm chair elsewhere in your house? Push big Big Bertha out of the room and try your other chair there for a few days to see if you notice a difference.

I also would not put the arm chair in the corner where it is currently located. It appears that your window to the right of the fireplace goes down low and the room will feel larger and more open if it is not blocked.

Per Beverly: Follow her layout. Paint all wainscotting white. Move your TV. Remove one lamp from the room. Get two large art works you love, one for over the fireplace with nothing on mantel and one for over the sofa. I'm posting society6.com prints because they're affordable, come in all styles and subjects and palettes. Choose your art first then a great rug that echoes the palette of the art. Here's a combo:

Fireplace:

Rug in teal and tan palette to echo art work.

Mohawk Home Essa Blue Abstract, 9' X 12' · More Info

Aurora Marble Rug, 5'x8' · More Info

I’m a glutton for punishment so I’d rip it all out and skim all the damage and put new baseboard on. I think realistically painting it the wall color gets you 90% there with a lot less effort.

Wow so much helpful feedback thank you everyone!

@BeverlyFLADeziner ok yes the rug is 8x10 and goes the length of the room, the wide angle lens made it look funky! Glad to know i did that part right haha.

Although i am fond of big bertha but I will try her in another room and see how it feels 😄

I will try the new layout you suggested. i also found out today that it may not be as expensive as we originally thought to have someone take the paneling amd chair railing off and then we would repaint the whole wall. If not though we will definitely paint the bottom white like you all suggested.

I am a rip it out and do it right type. Please when posting pics of a space remove the laundry so we can see the space not eye clutter. The TV will need a cabinet under it and make sure that cabinet is low enough to allow the center of the screen to be at eye level when seated .I do agree to much bulky furniture in a very awkward layout.

If you can't, or don't want to remove the wainscotting, I agree that it should be painted white. Painting it tan only calls attention to it. The painting and rug options suggested below would really kick the whole space up a notch into something that feels well thought out and stylish.

Yes to painting it all white 😀

@Patricia i have a 6 year old, a 3 year old and an 8 month old so the laundry is just a part of the decor at this point 😂😂