Adorable house - perfect backdrop for your English cottage garden! It looks like you have the space, and the patience, to make your dreams a reality.

Focus on the overall design and the "bones" of your garden first - those plants and structures (benches, trellises, etc.) that will give your garden its structure year 'round.

Because your vegetable garden is going to require a good deal of sun, you probably want to decide on that location first, then plan around it. Of course, in true cottage garden style, edibles can always be tucked in among the ornamental plants, as well.

Some plants are very easy to root from cuttings - hydrangeas are particularly easy. Do you have any friends/relatives who would be willing to share cuttings or divisions?

Definitely check out the Wintersowing forum. Starting from seed can give you a much wider choice of varieties, as well as being economical. You could get some annuals and perennials started from seed this winter.

I cannot be much help with design, as I tend to be somewhat of a plant collector and with the varying degrees of sun and shade in my small yard, things sometimes go where they must. I'm also not very good at putting it all down on paper (I know, I know, that's so important). Instead, I tend to create vignettes in certain areas that have certain needs (seating here, block an unpleasant view there, etc.) then connect those vignettes and tie them together visually as well as physically.

Check around for horticultural parks and libraries. I work at such a place, with over 3000 books, magazines, newsletter, videos and plant catalogs it's a wonderful resource for gardeners.

Good luck, and have fun!

As you are planning your budget, I hope you have considered how expensive and water-intensive replacing your turf lawn will be. That said, with fall coming soon, you've picked the right time of year to do it. I think the advice above is spot on, and locating your veggies and sun-loving perennials in the hottest, sunniest spots will allow you to minimize the amount of irrigation needed once your new lawn is established.

EEP! Screen the deck so critters (and kids) can't get under it. To the right you could build in some storage area with doors for toys and garden tools.

Regardless of budget, lay out the WHOLE PLAN right now.

Check out the sprinkler system and see where each zone waters, and mark it on your plan. You can easily change an entire zone to be a drip system for veggie gardens or landscape borders. You can't have a single zone for lawn sprinklers and drip system ... neither will work correctly.

Identify all those plants along the fence - most of them are probably poor choices and can be removed now, but you may have some things worth saving. You also may have some vines that will destroy the fence if they don't get a proper trellis (I think I see grapes).

1 - Minimize the lawn area. One big enough for a soft play area for toddlers is no larger than 20x20. To have a good play area for older kids, send them to the park - they need huge areas.

2 - Set up your activity zones ... landscape planning is just like furniture and house planning. Where does it make sense to do what?

3 - Decide on the future plants, generically speaking, and have a list of species and varieties and a spot on the plan for them. Native and whatever non-native can do well with minimal watering will also

For inexpensive to free landscape stuff, keep checking Craigslist and freecycle for free plants. Whenever I divide perennials or remove them, I usually advertise them.

If you have a plan, you will know whether the freebies are going to work or not, and save a lot of time.

Xeriscaping Tips: http://www.associatedcontent.com/article/45812/tips_on_xeriscaping_its_not_zeroscaping.html

I like the deck - re-staining it and fixing any loose boards is all I would do.

Here is a link that might be useful: landscape design for novices

Thank you SO much everyone. Very good advice about having the whole plan established before beginning any investment. It is the hard part, though, isn't it, for novices like me. I like the idea of establishing the bones first, activity zones etc. And, I am planning on having only a small area of lawn 20 x 20 or maybe a little bigger. I need to pace it out.
It's hard when you think of getting rid of all that lawn space to imagine what you will fill the rest of the space with.
I think getting cuttings and free plants over time will definitely minimize the cost. I also need to see if my front lawn (which was professionally landscaped before we moved in) has any plants which could be divided. Need to do a little research there.
I think I would like to do a cool color scheme. Stick with blues, purples, whites, etc.
So, far you have been immensely helpful. Thank you. Any other ideas or designs are welcome!

Casey and Melody-
I really like that house! And so many options for the yard, great for entertaining!
I also have been working on my landscape design on a budget. Just today I ran across a website which sells daylily fans (plugs) for just $1-2 each. Obviously very small, but good if you can wait for them to grow. I won't link the specific site here, but I think I just search online for "wholesale daylily" or something like that. Also, ArborDay online, offers very cheap (but very small) trees, shrubs, et cetera. I am going to use those where I don't need an "insta-tree"
Hope that helps!

Casey and Melody- I'm guessing you might live in Spokane, which is usually zone 5b. An english cottage garden will be beautiful, but do some research and find out what plants will be hardy in your zone and will do well with our winters. (I'm about a half hour southeast of Spokane.)

With two small children, you might also want to keep in mind that some cottage garden plants are very poisonous, while others are edible. Grass paths work very well for me, but I'm in a more rural location. I like them because they're easy to maintain and they're soft when the nieces and nephews take a tumble.

I'd recommend you include some fun features for the kids and do a little research on plants you'd like to include and their winter hardiness. There are so many things that do well in our area, but others can be a bit of a challenge.

I like old fashioned shrub roses (and there are a few that are thornless, or practically so) mixed in with lots of shrubs and flowers. For lavender, I love Hidcote, but Munstead should work well, too, if you're in zone 5. Hidcote is really purple and has a great fragrance...hardy to zone 4 and doesn't mind my overwatering it, when I water the roses!

You might want to visit the cottage garden forum, too. Lots of friendly and helpful people, and a few from our area. I've learned a lot over there :)

having the whole plan established before beginning any investment. It is the hard part, though, isn't it, for novices like me.

Not really. Get a couple of rolls of bright contractor's string and some stakes to lay out the zones and paths, then have walk-throughs and mime doing things like having a BBQ or taking out the trash. Move the stakes until it works for you.

THEN transfer the dimensions to paper.

READ THIS!!!! http://www.associatedcontent.com/article/56289/create_your_own_landscape_design.html