My house is in a small city lot, it's a 1924 Craftsman with a concrete block foundation.  On the north side of our house, between the wall and a fence line, the previous owner had asphalt over the entire space (about 100 square feet) making a walkway. On the other side of the fence, the next house's lot is about 3 feet above  mine so their yard ends with a steep slope into the fence... not a good start for grading.

We don't need the walkway so I put mulch over it, but there's some remaining water intrusion on the foundation blocks, behind a bathroom wall.  (I can tell it's happening because of the musty smell).  I was planning on sledgehammering up the asphalt walkway, removing it, then grading away from the house.  I started that today, only to discover that there's a concrete walkway below the asphalt.... so this may be a much longer job than I expected. 

I'm not comfortable using a jackhammer for the first time in such a constrained space, but it seems like this could take a very long time to do by hand.  Is it worthless to try to grade over the asphalt?  Or do I need to just suck it up and do the work, or pay for it?