You have done a beautiful job of tucking plants into the crevices of your retaining walls. Your house trim color is perfect -- just slightly lighter in hue than the retaining wall blocks. First I would paint the big, flat gray wall slightly lighter than the blocks and slightly darker than the house trim. The concrete walk and stairs I would stain a mottled blend of the blocks and the house trim colors. Next would be to paint the railing black or the house body color. Now, think of the following as creating a light, airy trellise structure from the walk-level face of the (currently gray) wall to about 7' above the top of the wall (using 6x6" posts attached to the wall) with a corresponding line of posts sunk into the terrace level 2' in from the outside edge of the wall-attached posts. The inside posts would be about 6-8" higher than the outside posts. Put 4x4" wood to attach the outside line of posts to each other and do the same with the inside line of posts. Run wood pieces at the top of the two lines of posts from the inside line to the outside line at about a 45 degree angle. They would be cantilevered up at the terrace level. Across the top of the angled pieces create your top trellise boards which run parallel to the two lines of posts. OK. There you have your basic structure. You might want to extend the structure around to follow the street side of the terrace. You could then follow the suggestion of reom10 above about creating a bench-planter on the terrace side. Your spacing of the boards parallel to the gray wall and attached to the outside posts would determine how private you wanted your terrace to be. You might want to soften the terrace "floor" by using something irregular like flagstone with groundcover plantings between the stones. From the latticework on top of your structure you could hang seasonal flower baskets. Plant vines to go up the trellis and spill down the wall. How about planting a row of tall, narrow shrubs along the neighbor's fence above your terrace to help add to your privacy and make your yard feel less 'structured'? Or, how about patio table/s with umbrellas to block your neighbor's view? Anyway, you have a fun project ahead of you.

Thank you all so much many of you suggested darkening the ceiling and leaving the beams the way it is to avoid too much work. What color did you guys had in mind?? isn't a lighter color suppose to open the room? Talianko and Hyde Evans and Shauna? ( I preferably will love a rustic lighter wood look, and the beams but does sound like a mission to get it done as sanding varnish on the ceiling might take me forever but if I get brave enough I might do it Sstar. Brio I do so want those curtains gone they are shocking :)you haven't seen the outdated blue couch yet... but I have to decide in the colors of the walls first :) I am inclined to have a rustic look for furniture... more like farm style and I also like wash off colors...my next vibrant color that i want to add is yolk yellow ( don't roll your eyes that will be in a cushions or a vase a picture) I am very impressed with all your answers and thank you all so much for taking the time to help a girl out :)

If you are going to 'inherit' the drapes, then I would work around them. Paint your room a gray and try to find a white comforter with a blue similar to the drapes. Add a picture over your bed that ties in the blues in the room. If you don't end up with the drapes try some different colors to compliment but not match the bright blue carpet and your black furniture. Another option is to buy a large area rug to cover most of the blue carpet ( but would still allow you to see the edge. That way the bright blue plays a minor part in the decorating scheme. I sloppily painted your room ( and bed etc) at the Sherwin William Paint visualizer online:

This made me laugh: http://www.theguardian.com/environment/2016/jun/09/seagull-turns-orange-after-falling-into-vat-of-chicken-tikka-masala I couldn't copy the picture, but it's hilarious.