OP,
You have a lot on your plate starting a new family, maintaining a home, a full time job, college and whatever other obligations you might have. I think the estimate you got is totally in line. But, I would think that a full restoration with modifications is something you cannot afford even if you had the time to do most of the work, which you have indicated that you would do. My recommendation, as an official old fart, don't spend the money on this project at this time. There are three paths open to you at this point.
1. Sell the heap of parts. It cost you a wrecked GSXR, I know you could get the investment back plus some.
2. Learn new skills and build a driver. Brace the cab, cut out the rust, weld in patches, seal, prime and paint with the cheapest single stage you can find. Put it all together and drive it or sell it for whatever the market will bear in your area. If you decide to do this, watch Gibson63 on YouTube to see what you can do in your garage with only a few hours to devote at a time. He is a building contractor with multiple jobs going at any one time. He still manages to do amazing (to me) work in small blocks of time in his garage. Even doing everything yourself won't be cheap so make sure you have the resources to get it done. The frame mods can come later, after you have the confidence to tackle that job.
3. Look at the project sitting in the garage for several years until someone takes it all away for $500.