Like most others, I have considerably more in my audio than $400. I also have built it slowly over the last 30 years. Hard to say how much is currently in the system.
The value of surround is very dependent on what you watch. If you like action adventure type movies, then a Blu Ray player and the best sound system you can justify is a must. If you mostly watch network TV, you may find that surround sound adds very little. Most TV these days is mostly mono.
However, that doesn't mean that you can't gain even with broadcast. TV speakers are always of poor quality that makes it hard to hear the dialog, much less the background. I think you would find that a HTIB would improve things. In your particular case, you might get more from a $400 soundbar though. You could get better speakers in the soundbar, although fewer of them. You give up the rear sound, but can get better overall sound from the front.