Della and Jim have very little money to spend on each other for Christmas.
They lived in a small apartment and have few worldly possessions.
Della knew she couldn't find a gift with only $1.87 and decided to sell her hair for $20 to a hair dresser. With this money Della buys a gold pocket watch chain for Jim's gold watch.
Jim also had no money and decided to sell his watch to buy combs for Della's hair.
When Jim came home he saw that Della had cut her hair. Della told Jim that she cut her hair to buy a him a chain for his watch. Then Jim told Della that he had sold his watch to buy the combs she wanted.
They realized how much they loved each other because they were willing to give up their most prized possession for each other.