You're daugher won't remember her first Christmas but you can keep things simple. If you have some decorations, put them up and take some pictures. I would also recommend getting out of yourself. You could do some volunteering or do something nice for someone else. Local churches in your area may be doing something for family's just like yours. Check out local food pantries which may be at local churches. This will help with the food issues.
To get out of the blues, dare to do something different and stop looking so closely at what you don't have but look at what you do have. You have a loving husband, your health, two beautiful children. Perhaps your family can come to see you or perhaps you can meet up somewhere in the middle.
Christmas is always on December 25, that is just one day out of 365. You can buy simple gifts throughout the year when things are a little better. I love going to the dollar stores in my area. They have great things for only $1.00.
One year a few years ago my best friend needed to decorate for Christmas on a tight budget. So for $10, she got a tree, lights, ornaments and decorated for the holidays all from the dollar store. It is worth a look but really getting out and doing something for somebody else might be just the thing to snap you out of your blues.
The best gift you can give your kids when they are from 7 and under is the largest cardboard box you can find. This box can be a car, a fort, a bus, a house, and is only as limited as the imagination. Some paint or crayons can decorate the box but is not necessary. I found this out the hard way. Bought all these gifts for the sensational six only to discover they loved the tv box best of all.