Garage Woes

Our home has a single-car, attached garage. While we have two cars, we figure that it's better to have at least one car protected rather than neither car (maybe). Anyway, during our home inspection, we found out that our garage was originally a carport. Then, I found a picture of the house taken in 1959, and it proved to me that our garage indeed used to be a carport. I didn't really give any of it a second thought, though.

Well, enter in cold, wet weather. Now, I've come to realize that converted carports are a joke. First of all, the bottom row of siding is rapidly deteriorating from water damage, leaving us with big gaping holes where the siding has completely rotted-through. Shouldn't there be some sort of "concrete wall/barrier" around the bottom perimeter? There's water everywhere! I'm not really sure what can be done. Is there any way some sort of concrete wall or cinder blocks could be built up around the bottom perimeter? Do I just need to replace all of the rotten siding with new water resistant siding? Or, do I need to start saving up to rebuild/remodel the garage? I just don't know. All I do know is that whatever the solution, it's gonna be really expensive.