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O. Henry’s short story “The Gift of the Magi” opens with one dollar and eighty-seven cents. That's all Della Dillingham Young has to buy a Christmas gift for her beloved husband, James Dillingham Young—better known as Jim. Oh yeah, and it’s Christmas Eve—so she’s not only low on money, but time. Faced with such a situation, Della promptly bursts into tears on the couch, which gives the narrator the opportunity to tell us a bit more about the situation of Jim and Della. The short of it is they live in a shabby New York City flat and they're poor. But they love each other.
Once Della's recovered herself, she goes to a mirror to let down her beautiful hair and examine it. Della's gorgeous, brown, knee-length hair is one of the two great treasures of the poor couple. The other is Jim's gold watch. Her hair examined, Della puts it back up, sheds a tear, and bundles up to head out into the cold. She leaves the flat and walks to Madame Sofronie's hair goods shop, where she sells her hair for twenty dollars. Now she has $21.87 cents. (When was the last time you got a haircut and made a profit?)
With her new funds, Della is able to find Jim the perfect Christmas present: an elegant platinum watch chain for his pocket watch. It's $21, and she buys it. Excited by her gift, Della returns home and tries to make her now-short hair presentable (with a curling iron). She's not convinced Jim will approve, but she did what she had to do to get him a good present. When she finishes with her hair, she gets to work preparing coffee and dinner.
Jim arrives at 7 p.m. to find Della waiting by the door and stares fixedly at her, not able to understand that Della's hair is gone. Della can't understand quite what his reaction means.
After a little while, Jim snaps out of it and gives Della her present, explaining that his reaction will make sense when she opens it. Della opens it and cries out in joy, only to burst into tears immediately afterward. Jim has given her the fancy set of combs she's wanted for ages, a really nice set made from real tortoiseshell. The combs would’ve been the perfect gift, but now she has no long hair in which to wear them. Jim nurses Della out of her sobs. Once she's recovered, she gives Jim his present, holding out the watch chain. Jim smiles, falling back on the couch. Having very little money himself, he sold his pocket watch to get enough money to buy Della's tortoiseshell combs, he explains. He recommends they put away their presents and have dinner. As they do so, the narrator brings the story to a close by pronouncing that Della and Jim, though they sold their most prized possessions, are the wisest of everyone who gives gifts. Comparing the young couple to the wise men who brought the baby Jesus gifts in the Christmas story, he says that “they are the magi.”