I think you have to accept the gifts that she feels good about giving. And set an example by not buying anything since you explained the situation to her. You were honest, and you shouldn't feel obligated to make a purchase you can't afford. I always buy gifts for the grandkids of my DSIL. I do not expect her to buy for mine. Sometimes she makes things for them, other years she doesn't. Have your kids make thank you cards for the gifts. She will get pleasure from that.

Thank you cards are a great idea, that's what we will do!

Have a very Merry Christmas with your family!

I think this is a great idea. If you can't make the goodies, a basket of the ingredients and a recipe would also be nice. Everyone likes goodies at Christmas, and the kids are old enough to fix them themselves.

Excellent idea!. The gift is in the giving.

If all else fails, make her kids some homemade snack crackers. Really tasty and cheap.

Take two 99 cent bags of oyster crackers, a pkg of original dry Hidden Valley Ranch dressing, 1/2 cup of oil, and a tablespoon of dill weed. Shake all together in a big paper bag and then lay out on some paper towels to 'dry'.

Anytime I've taken this somewhere, people (and kids) really like it, and it's cheap and easy to do.

I agree with those who have suggested cookies or snacks. Most kids love to eat!!!

I say make a plate of cookies and brownies for the family. Both very cheap and easy to make. Or something else to that nature. You could even make bar cookies! Takes even less time.

I would make them a batch of cookies or some fudge and say it was for the whole family as a thank you for their kindness to yours.

Thank you cards and cookies it is :)