OP here - thank you for all your thoughtful posts on this topic. To give you a better idea of my past actions, let me say that I have almost always treated things as loans ($ for major Christmas shopping or groceries) because I don't want our friendship to become a parent/child thing or for there to be an "I owe you" feeling, which is how I think it would become if I gifted everything instead of loaning money.
I have, however, for a number of years, given Christmas and birthday presents to the kids (usually a small gift card for them all at each ones b-day because otherwise they might literally have gotten nothing some years), and at Christmas the past few years I have done a grocery store gift card because I know their finances are really tight, especially around the holidays. I know they can't reciprocate, but that's alright - and I hope they don't feel like they need to. She definitely tries to do nice things for my kids when she can (little tokens here and there as the opportunity arises).
Sadly....I just found out this week that "all caught up" with bills actually means they still owe their utility company quite a chunk of change ($1K plus evidently - but less than they have owed the past few years); they've had their utilities (gas and electric) shut off before because of non-payment. The same with phones (land line before, now cells), but they are evidently caught up on that, thankfully. What really got me about that was the fees they paid to have things reinstated would have gone a long ways in paying bills...
They do get assistance with winter utility bills from a state agency, and she has mentioned they have received help with food from a local church/food pantry in the past a time or two.
It's just that none of this seems isolated - it's how they live. Her DH's job is quite consistent, so they honestly know how much they have and how long it has to last. It is nearly always a crisis, though. I have suggested a job, but there is always a reason it won't work. Now that her kids are older (they're in middle school, nearly high school) it seems like a daytime job would be good, but she says she needs to be there in case they get sick and need to come home. That happens to every mom, but you deal with it.
Yes, your employer may not like it, and if it happened too much you'd be looking for a new job, but you do what you need to do to get by IMO. I know I've taken some less-than-ideal jobs to pay the bills in the past.
Anyways, I suppose the reason this info all comes around to me is that I try to provide a ride to and from the grocery store at least every other week so they don't have to call a cab to bring home groceries. I know they spend some $20 or $30 on a cab when they have to use one which will buy a LOT of food, so why waste that money if I can give a ride. But because I provide a ride, I hear a lot about how much things are costing, or how little $ there are for groceries - I think it's just a natural thought process when you're headed to the store to spend a big chunk of your hard-earned cash.
As for it being an isolated splurge, that is probably true. There aren't many splurges like this in her life. I know it happens a couple/few times a year, but not much. And I think, were I in her shoes, I'd feel a strong desire to do the same. I just think (or, perhaps more accurately, hope) that need would be overridden by the need to pay my bills and feed my children. I know when DH and I were struggling financially all extras went out the window. We made do with bare necessities until our finances were better. The difference is likely that things DID improve for us within a couple years where, for them, this is a constant state. That probably would wear me down.
So, after that looooong lead-in, I'm thinking I'm going to continue doing as I have. I can't fix things for them but, as many pointed out, I could probably make it much worse by not loaning a few dollars when they need it. I'll also continue dropping off a gallon of milk and loaf of bread once in a while as a gift - it isn't much, but I think it really eases things for them a bit. And I'm going to try and just let it go when things like the boots - or whatever - irk me. It isn't worth losing a friend over, and I don't see - after all these years - things changing just because I say something.
Thank you for letting me vent, and for acting as a sounding board. Hearing your thoughts has really helped me see what is most important here.
) Which turned into a bad situation, but I finally told this friend that friend to friend I'm very very worried about her and worried about her financial decisions, which she let me know was none of my business and something friends don't critisize other friends about. I know this particular couple claimed bankruptcy 1.5 years ago, but she has never told me this, I know last year, they didn't pay their mortgage for six months and then again stopped paying their mortgage in August, their kids had a huge Christmas that they can not afford, but by not paying your mortgage it gives you extra money for the important thing. In March every year either their electric or gas is shut off for failure to pay, but she goes to bingo every Saturday and her husband doesn't miss a weekend of beer or tobacco, even when there's no money for anything. She has a huge scratch ticket issue and recently was at Foxwoods by herself and won $1200, instead of spening that money on something important they went out and bought a 42 inch TV for their kids playroom. Long story short again - I don't think we can make people realize their irresponsible spending and financial habits because there is always someone there to pick up the pieces, but I'm glad to know that I'm not alone in the way I feel.
). 
