If it were me, I would just stop exchanging gifts. It
I just have to laugh now.
I wouldn't give a used gift either.
However, I also wouldn't exchange gifts with my sister.
You live far enough apart that it has to be mailed, and it sounds like money is tight for both of you. Do you have to send something for them to know that you care?
For awhile, my sister and I both exchanged gift cards at Christmas. I finally put an end to it. Where is the sentiment in you sending me a $30 gift card and I send you a $30 gift card? I told her, "Let's just know that we love and care about each other and call that our gift ok?" She agreed. It's taken a lot of the stress off of me at Christmas and I feel no differently on Christmas morning.
The fact that she has a nice used jacket she wants to share with you, is "nice".