Need advice! Backyard 2 tier with fire pit possible?

Hey r/landscaping,

My wife and I just recently bought a townhouse and needless to say the backyard needs some tlc. We have been talking about possible ideas however neither of us are experienced in landscaping. We would like to expand our patio to spread the entire width of the bottom, cut into the hillside and build a curved fire pit (wood, not gas) and flatten the top of the backyard. Here are some links to the style of fire pit that we are hoping to copy. Obviously these are amazing and I am not expecting our backyard to look identical. Just going after the overall idea.

I have included 4 pictures of our backyard for reference. One is a poor PSD of what I have in mind.

I would like to do as much of it as I possibly could. Would it hurt to start digging into the side of the hill or are there other precautions that I need to take because of the rock wall surrounding the yard? Any pointers/tips/ideas/help are welcomed! Thanks!

submitted by /u/Shooter_Mcgavin4
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