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How is the best way to set boundaries with christmas shopping?

Growing up we didnt have much, my mother is a compulsive spender and would spend anything extra on weird things and namebrand whatever. We made above average income and my parents traded times filing bankruptcy, therefore christmas was always my mother attempting to make it the way it is on tv, never worked. Now I am grown with 2 soon to be three children of my own, my husband works full time and I am lucky enough to be home with my little ones who are 9 months and 2 years old, we are due end of december maybe into january. My parents work full time and my sisters are both preteens. The problem is this, my mother is working 12 hour days 7 days a week has been for several weeks to pay off her credit cards which is admirable if she hadnt filled them to begin with. Unfortunately for my small house, she is doing this because she wishes to spend 300 on each of my 3 little ones for christmas, and will not listen to reason. I am only spending a cumulative of 60 for the 3 toys for the 2
I tried to tell her 100 for all three was even too much and she got offended. She intends a little tikes playhouse, 2 cozy coupes, a jungle gym from little tikes(8 in 1) a nursery set(we are just planning on reusing what we have, it is in fine shape but a new crib for the baby) and she has a list a mile long of little things. I dont have room for this stuff and we never really get rid of something we like for the kids as we only buy when we feel it is a good idea and we will get lots of use out of it) I told her what we dont have room for needs to stay at her house then and she was offended, she wishes us to finish the basement into a giant playroom but we are moving to the gulf coast in may timeframe and then will not have a basement and yards tend to be small where we have looked.
I understand she just wants my kids to have what my sisters and I did not but we choose to not have alot, getting our home and car paid off before the kids reach school age is our goal which we cant do buying more home than we feel is nescessary or spending tons on christmas, I want to take the kids on trips around the country and world at that point so we cant have a house or car payment. We can afford to spend more but choose not too and having her spend so much to buy the things we dont want our kids to value is somewhat of an affront to us and I am just not sure how to address this as everything I have tried offends her.
Sorry I should have worded better she is emptying the credit cards by paying them off to spend the money on my kids, that is partly my problem as later she will turn around and expect me to feel bad for her and buy my sisters expensive gifts when she is again over her head

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