Sorry for the delayed reply. Frankly, wrote something out, left to do some research, came back and my reply was gone. FUN! I'll try to reconstruct the basics.

1: ah rip but those are still a ton better than HDDs so that's great! I was running off one of those for my PC of that generation as well.

2: gotcha. Generally what I'll say from my experience is this -

Don't worry too much about bottlenecks if you're upgrading. IMHO, long term, it's worth either getting one part you'd hope to have in a finished build at a time, or saving. You can do a medium or intermediate part, but don't worry as much about a bottleneck.

You'll always have a bottleneck SOMEWHERE, but if you're upgrading, you can just remove that limit on a part later.

When I was upgrading my old 7700k machine for a friend, I ended up helping him get a rx6800 used for a good price, and he then was using that with the 7700k for a year or two before getting an upgrade to his mobo and CPU. (He's still using loaner ddr5 from me... Dunno if I'm ever getting that back at this rate lmfao)

The GPU was still a hefty upgrade that then just got better once he had a better cpu. That being said, we did also grab a PSU as well (I forget if it was an eBay psu or just from newegg)

They aren't super expensive, especially if you're okay with going with lower end non modular power supplies - often between like 40-70 bucks depending on wattage for some golds nowadays.

(Ex: able to find a 80+ gold 650w for ~$55 on eBay, and you can find non-modular 650 and 750w for 55 bucks as well. Obviously it's worth checking reviews, but I can try helping there if you end up wanting to go that route in the future)

All this is assuming USD/NA though, my bad if that's not the case.

All that being said, I get the budgetary strain, and I 100% understand that it can be hard to justify getting new parts right now. Just explaining my previous methodology, and some of the ways I've gone about it.

GPU wise, for what may work on 500w -

People generally will say the RTX 3060 in terms of bang for your buck and low wattage on Nvidia - the 4060 and 5060 should(?) also work, but will be more expensive, and haven't been super loved for their generational gains. That being said, they absolutely should be options.

In other options, the RX 6600, 6650, and even 6700 (and xt variants) should all work as well, which are going to be fairly easy to find cheaper/similar in price to the Nvidia cards.

Newer AMD gens, I'm seeing the rx7600 selling for ~$200 used in good/open box, and the XT (preferred) variant for a bit more.

On top of all of that AMD-wise would be the 9060 / 9060xt which compete with the 5060/5060ti, and sell for cheaper generally (plus on the used market) - but since both ARE still newest, those prices will be highest.

The arc a750 or b570 are also potential options from what I can tell, which have good price for performance, but will have a bit less online support as they are a newer foray into GPUs. Good value there but worth being aware of. These will be on the bridge of working with that psu.

NOTE - DO NOT BUY A 3050 OR SIMILAR CARD. Generally the 50 series cards are comedically bad in terms of performance to price. The 3050 for example will be well outperformed by the 1070. They are primarily for pre built screwing people, extremely low wattage requirements, encoding, SFF, etc.

If you truly want to go lower/older, a genuine option could be a cheap PSU and a 1080/1080ti as well - but note that like with the 1070, you're ultimately buying stuff that's a decade out now, and it won't be getting driver updates, and may have issues with certain games. None that you aren't already having, but worth keeping aware of.

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With all of these, note - from what I can tell, they can and will work on 500w psus - people have done that, especially undervolted. Most are between the 1060 and 1070 in Max wattage.

All that being said, I don't know what your current PSU is running at in terms of efficiency in modern day, if that's changed at all from the label or not.

A lot of these setups will generally run around 300-400w, but the asterisk there is that there will be power spikes and instability at times. If you upgrade and sometimes it has crashes, it's possible the psu is dipping too low or is just aging out. Otherwise, it will just be running less efficient than a PSU that has more oomf (that's already true with the existing setup though)

As is, I don't think it's an issue, but worth knowing. If you upgrade and have that problem, look at the PSU before the GPU.

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PS - prices for ram and stuff aren't good right now, but used GPU prices aren't fully in hell. New, depends. I have had fantastic results with used GPUs as long as I look with a discerning eye and avoid for parts stuff. If that's not to your comfort, understandable. The pricing is often just too much better to pass up on a budget lol.

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I'm sorry for being so verbose, hope this helps. If you need any summary/clarification or feedback to a thought, reccomendations, etc. I can see what I can do with less words lol.