Jamie Cameron-Harley is big on Christmas. Her family loves to host a big holiday party, complete with a special gift for each guest. She generously spends on co-workers, family members, her husband, her son.

Not this year. Festive but frugal is the mantra for Holiday 2008.

"Before it was just mindless spending. Now, we're just really watching what – and why – we're spending," said Cameron-Harley, a staffer with the state Integrated Waste Management Board.

This year, she's baking and making more gifts. A neighbor with pomegranate trees offered to teach her how to make the ruby-hued jelly, if she purchases the canning jars. And instead of lavishing money on sweaters, toys and "things that gather dust," Cameron-Harley and her husband are buying one big family gift that everyone can use: a Nintendo Wii.

The Arden-Arcade resident figures she'll be saving her family about $800 this year.

She's not the only one cutting back. Amid an increasingly queasy economy, 50 percent of U.S. adults plan to slim down their Christmas, Hanukkah and Kwanzaa holiday spending this year, according to an October survey by the Consumer Reports National Research Center.

When it comes to holiday gifts this year, U.S. consumers will spend an average of $431, a 50 percent drop from a year ago, according to the annual survey by American Research Group Inc. That's the lowest amount in 17 years.

But it doesn't mean the holidays need be a grim, Scrooge-like affair. Here's how to celebrate and stay debt-free:

Make a list

Decide whom you truly need to spend on: baby sitters, teachers, spouse, partner, kids, co-workers, friends, relatives. If the list is too long, pare it down or consider less-expensive gifts.

Karen Goodfriend, a Los Altos-based CPA who serves on state and national personal finance committees, says this year may be the time to talk.

"If you're feeling concerned about spending, have a discussion with other adults in the family and ask: 'Do we need to give each other gifts? Let's focus just on the kids.' "

In this economy, "your adult siblings will understand. And they may feel exactly the same way you do," Goodfriend said.

Look for deals

From Target to Toys R Us, retailers are rolling out pre-holiday sales even earlier this year, so check your newspaper inserts and Web sites for discounts and coupons. Compare prices when shopping for popular items or big-ticket purchases.

Get creative

Look for ways to give that don't break the bank. Think about baking up a plate of cookies, bottling your favorite herb vinegar, mixing up that killer BBQ sauce your friends all crave. Hit craft stores for gifts you can make, such as scented soap, mosaic picture frames and stamped stationery. Turn a year's worth of photos into a personalized scrapbook or make a 2009 calendar using favorite photos from this year. At some craft stores, you can find photo calendars for only $1.

Pamm Anderson-Vernasco and her husband celebrate the holidays each year with their blended clan of 15, including kids and grandkids ranging in age from 5 to 34. A year ago when the gift-giving became too cumbersome and too costly, the Fairfield couple got creative. They picked names and asked everyone to make a gift, not buy one.

"Everyone really had to stretch their imaginations," says Anderson-Vernasco, who owns a bail bonds company in Napa and is a part-time vineyard owner with her husband, Pete Vernasco. "At first, the boys were really unhappy trying to think of things to make. It was easier for most of the girls. The anticipation – and anxiety – of what each one was doing was heartwarming. By the time Christmas Eve rolled around, everyone was more excited about giving their gift than receiving a gift."

Among the homemade surprises: Lotions in decorative bottles; a guitar-shaped wall sculpture made of wire; a bottle of coffee-flavored liqueur; a bookshelf made from wine barrel parts; a family tree with everyone's name inscribed; a custom CD burned with favorite tunes and flower pots planted with lettuce.

Have your own frugal-but-festive holiday ideas? Share them with Claudia Buck at: cbuck@sacbee.com or (916) 321-1968.