Before you begin
If you have a problem with moderate to severe dampness or leaking, deal with it before even considering turning your basement into a living space.
Consider installing ventilation
Another common problem, even with fully waterproofed basements, is mould, mildew and mild dampness. Consider installing or beefing up ventilation, ideally with ductwork or ceiling fans. A dehumidifier (portable or built-in) will make the air more comfortable in the basement as well.
Consider replacing paneling
Dated paneling in good condition can be painted, and if it’s textured, the surface can look quite attractive with a fresh coat of paint. For a little more money, consider replacing the paneling with horizontal pine boards, for a seaside cottage look.