Oh, I love the homemade puzzle book idea! A lot of our ideas/things we have tried are similar.
For family and friends that are close to you, consider giving service certificates–“Good for one car wash” “Good for one visit to read/visit with Grandma” “Good for four hours babysitting” “Good for one loaf of fresh homemade bread just when you need it–call a few hours ahead” etc. Or have an activity in your home–a Christmas craft, or cookie exchange, something very simple and inexpensive.
Some food gifts can be very expensive, but if you “specialize” in one thing, you can really stretch it. I inherited a terrific fool-proof fudge recipe that I can vary several ways, takes about 15 minutes to make and costs about $3 per batch if I catch the ingredients on sale, but when I wrap the pieces up in pretty foil or paper and put a bow around that $3 batch, it looks really special and I’ve never heard back from someone who’d have rather had slippers or a tie. 🙂
For family who live a longer distance away, how about a “family memories” book–have your kids call and email everyone for favorite Christmas memories and recipes, put them all in a booklet or even a website or blog or something, and then give everyone a photocopy (with careful planning could run only a few dollars) or the address to the blog. How about just a good long loving letter, decorated by kids’ drawings, of what you love about that friend or family member? A “Bible Verses for Aunt Sarah” booklet? A “Favorite Funny Things Said By Uncle Fred” booklet? A simple ABC booklet using cutout magazine pictures for a toddler cousin?
Another thing we’ve done–years that family portraits were just too high, we learned a little about photography, kept trying until we got a fairly decent home-taken portrait, and had Wal-Mart print off 5×7’s for everyone–they were only about $3, I think. (Can you tell I spend a lot of time trying to stay in a $3 range, lol?)
We’ve also found it useful to simply bring this issue up with family members. We’ve often been able to come to agreements like “We’ll only give gifts to the children” or something similar to cut costs for everyone. I think it’s a pretty common failing that MANY of us spend more at Christmas time than we can really afford.
I hope to see lots more ideas, I think we all need them!