If you put a friendly picket fence between you and your neighbors (the ones you like) you could make it lower (3-4 ft) so you could talk over it, and put a gate/arbor/pass through/your choice at various points along it (between you and your neighbor).

I think a privet hedge is more constricting than a low fence--my kids will hop a fence if invited but the privet says "do not enter".

Privet is a useful plant; tough as nails and very forgiving, but in my area (So. Me.) it's now gaining a reputation as "invasive".

I love our hedge (looks "boss"). But it requires maintenance to look its best, even when you don't feel like spending a few hours trimming it! If you decide to "hire it out", it will cost money and you will have to make sure the people you hire actually know how to properly prune a hedge (most of them don't, that's why most hedges you see have "bare ankles"). So beware of hedges.

My 2 cents.

Goylesgirl,
The budget you are restricted to means everything.
If you had tens of thousands of dollars available, you could hire a designer and have a pro help you out.
If I didn't have a lot of money, this is what I would do to start out with,
The retaining wall that you see when you look out of your kitchen should be stabilized to make sure it is safe, first.
But boy, what a great platform for wonderful plants!
There are so many plants you could grow on that wall simply by asking a local nusery person for ideas!
You could buy rocks also, or you and the kids could look for different rocks you could handle to "strategically" place them to decorate and further stabilize that slope.
Then you can shop for your Coi pond.
Don't get a big one. Or even a small waterfall leading into the small pond at the bottom? (the rocks you find would do nicely for the waterfall).
Please don't buy privet. You will regret it.
Become familiar with the world of vines. You are in zone 6, so try a indigenceous form of Honeysuckle- not the japanese kind, unless you don't care for shrubs next to the fence.
The japanese kind smell soooo good, but are extremely invasive. They are also evergreen! (All honeysuckle is).
Vines grow fast, they are cheap and beautiful and you can train them to do anything as long as they have something to climb on, and you have plenty of fences for them.
Until you can afford a pro to hardscape your yard, and believe me, it is pricey, visit the shrubs and vine forums and ask questions.
Good Luck to you!

I wouldn't recommend a Koi pond for anyone on a tight budget and with small kids. Koi are much more fussy about their living conditions than goldfish, and require a larger volume of pond per inch of fish as well. They produce a lot of waste, requiring a good filtering system. All of this will cost money to install and maintain, and will require a fair amount of time to keep clean and looking good. A pond deep enough to keep Koi may be a danger to your kids, even with a gate. Kids get into everything. Also, keep in mind that Koi are not decoration, they are living creatures, and deserve a clean, healthy, and comfortable environment to live in. Ponds attract wildlife, including snakes and racoons. Another issue with small kids, given the problems with rabies in many areas. I'd put in a small recirculating fountain if you want some water, and save the pond for later, when the kids are bigger, and you have more time and money to devote to this kind of project. Just my opinion.

As far as the wall, you should be able to rebuild it. Get a couple of books out to learn how to do it properly, or you could end up with a safety hazard. Wall building is hard work, but very therapeutic and rewarding.

If you really want a separate sitting area, grow some vines on the fence to hide it. Annual vines will give you quick cover while you wait for something more permanent to reach a good size. A small area paved with concrete pavers that cost about $2 each can give you a spot to put a bistro table and pair of chairs, or wooden garden bench and small table. Mulch the rest, and start collecting plants to fill it up. Plant swaps are a great way to get some wonderful plants.

Just getting the weeds and stuff cleaned up will make a huge difference, as will covering the chain link fence.

Thank you for the replies.

I don't think I want to go with vines, as I have never really liked that look with the chain link. I do like vines on picket fence however, so maybe that is a solution for the upper section. and I could do something different down below for more privacy.

Butterfly4u, why would I regret the privet? I have heard, like chelone, that it is considered an invasive, but there are lots of people around here with it, and nobody has said it has caused a problem. Although, this is another case against the privet. In my ideal world I would like to use only natives.

The retaining walls are not really a problem. We have plenty of rocks and a little experience building and rebuilding. I just don't want to go through the hassle, if I'm just going to tear it down for a waterfall.

The Koi pond is something for a liitle down the road, I just want to be able to plan for it ahead of time, since I am going to have to reshape the land in some fashion. This is where I am stuck. I will probably have to put in some new rock retaining walls, but not sure where or what shape. Do I just go straight across, like the other side, or should I do a circular area, some other kind of curve, maybe a deck ...??? Do I use the same material as the patio for the seating area, or just some chairs (I have some large stone I could possibly use for benches-I don't think I'll need a table over here) on mulch, grass, gravel, moss...???

My two cents:

I would make plans for a pond if that is what you want, I would make a waterfall on the slope coming down into your pond. I have heard people say to build the pond big, because you always want a bigger one in the long run, plus with a waterfall, you will need at least a 10*4 to be in balance. You could always have goldfish now, and switch to more expensive Koi later, or plants etc.

I would do the retaining wall in a curve, but that's just me, I'm not big on straight lines, they are more formal, curved lines are more natural. Is that a hillside under the retaining walls? If so you could do a tiered garden here, different retaining walls at different levels and plant all kinds of flowers. you could enjoy a hillside garden out your kitchen window.

For your seating area, you could do the same material as your patio, or you could do a more natural stone to match your pond.

Your lucky you have a blank slate to work with, and so many possiblities. I can't wait to see your progress.

Brat