Only spend what you have to spend. In other words plan your Christmas time around your budget. A lot of fun comes from cheaper things to do. It means more interaction. Have you watched kids often(not teenages who like designer labels!) get a lot of fun out of the cheaper presents.
Make homemade gifts like jars of cookies, fudge etc. etc. dress them up with colored ribbons etc and they would look great.
Alternatively, save or spend earlier in the year.