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Get the mechanical work done first, then consider the rest of the budget. Period.
You could also take into consideration planning that path to be semi-removable in the future.
From the air, I see a long, narrow house surrounded by a thin strip of yard.
First, I'd plan "areas" of use:Sitting, bbq, walking transitions, kids play(a couple of these would be best so each has their own), private area for parents, etc. The list goes on. There may be enough room at the corner of the street to have a patch of grass for throwing the ball.
Smaller areas look bigger with smaller plants. Flowering shrubs look nice and are easy maintinance. Hostas fill in shaded corners nicely. Don't plant anything tall too close to walls. Multch prevents drying out, weeds, etc, but don't overdo it at first. I like shredded cyprus because it's soft and breaks down quickly to be turned back into the soil.
Plant a single or several ornamental decorative trees as focus points. These hide views of ugly street/neighbors from the inside, and break up long square sections of wall from the outside. Plan everything else(pathways etc) around those.
I'd keep an open fencing to not make the small yard feel enclosed.
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