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I want to continue with Intel and believe my primary needs to be MB CPU and RAM
I expect to spend $500 but I am flexible depending on your advice. I suspect the PSU may need an upgrade. I use Newegg for my parts. I ran a few tests on their configurator and the recommendations were 500+W
Yes - you can reuse as many parts as you'd like to save money. Upgrading your motherboard, CPU, and RAM should be sufficient enough.
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The CPU from Microcenter is $179.99 +MB $69.99=$250, which will get you more then enough to a good PSU, RAM (you may go with faster RAM).
Not everyone has a Microcenter available so that's not always an option.
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I would like to consider an SSD for the OS, Pshp an and LR. I don't know if it is better to put only the OS on an SSD. Advice is welcome. LR and PS are the only programs I would consider putting on the SSD with the OS.
An SSD is definitely a good idea - but you'd be wise to get that after you get your build up and running. I use and HIGHLY, HIGHLY recommend the Crucial M4:
http://www.newegg.com/Product/Product.aspx?Item=N82E168...
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PS and LR are memory hogs and I want a minimum of 8 megs and may go to 12 or 16 if the budget allows.
I need heat sink advice as well.
You need 8GB for sure - 12GB is only advised for triple channel X58 systems (which are being phased out) and you only need 16GB if you work with large files - on a gaming system that's not necessary.
Try this combination:
Motherboard:
http://www.newegg.com/Product/Product.aspx?Item=N82E168... - Gigabyte GA-Z68XP-UD3H - $159.99
CPU:
http://www.newegg.com/Product/Product.aspx?Item=N82E168... - Intel Core i5-2500K - $229.99
Cooler:
http://www.newegg.com/Product/Product.aspx?Item=N82E168... - Cooler Master Hyper 212 Evo - $34.99
RAM:
http://www.newegg.com/Product/Product.aspx?Item=N82E168... - 8GB Crucial Ballistix Sport 1600MHz 1.5V - $44.99
Total: $469.99
And then your PSU will definitely need upgrading - if you can squeeze it in your budget maybe try something like this:
http://www.newegg.com/Product/Product.aspx?Item=N82E168... -*Or this* -
http://www.newegg.com/Product/Product.aspx?Item=N82E168...