Let the Christmas gift debate begin!
I like your idea of taking the materialism out of the holiday, though you do sound like a humorless Scrooge. Your sister-in-law is wrong to accuse you of "ruining" anything. And what if your husband decides to continue to give gifts to these children? Will you permit him? One way to celebrate without giving material gifts would be to start a tradition involving the extended family. You could treat the kids to a holiday concert or a production of "A Christmas Carol." You cannot control other people.

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