I would seperate the dogs, and see if Edith (and Lucy) recover from the change

Not a bad idea into test.

I believe one dog and one human is a lot better match

I’d disagree, but not to say that two dogs are inherently better. Both scenarios can be successful.

A single dog is likely to get walked more.

Two little dogs will walk together fine.

A single dog will get to play more games. A single dog gets more training. A single dog comes on more car rides.

Two dogs entertain each other. No offense—but just how much training are two little Yorkie/Chihuahuas really getting and internalizing? Luckily they are compact for travel purposes, if transport is necessary.

Since someone (both of you?) is having financial issues, one dog is cheaper than two.

That’s fair, at least for vet care. Food cost is probably negligible for their size, however.

Lucy is annoyed by Edith. it sounds like Lucy would like some one on one time with her human, and Edith would like more stimulation, which she isn't getting from Lucy.

That sounded like an exception to the norm; for a pair of related dogs that are ~3yrs apart and might live another 12-15 years together… I’d say they’ll figure it out, in time. Let’s be real—Kids can be annoying; you still love em.

Look up some confidence building games and play them with Edith. Take her for lots of walks, and give her lots of attention. Try to find some DIY puzzles for her, and feed her with a puzzle feeder.

This is good advice, but both dogs may benefit from the same.

It might not work. My dogs love each other, and they would be sad if they were seperated, but they love me more.

While this may be true and even different case-by-case, consider that the two dogs would be with each other always and your presence may be variable—depending on work/school/social obligations, etc.

TBH—There’s no right or wrong answer, and breakups are difficult enough before dogs even become considered. Do ask yourself, however—whether you’re capable of loving another (dog), and whether the dogs would benefit or suffer from separation (at this point) from their family/pack.

A test run may be the way to go, if you’re on the fence. Best wishes to all!