Rising action: The rising action takes place when Della realizes that she only has one dollar and eighty-seven cents to buy Jim a Christmas present and makes a decision to go to a place where they can cut her hair, so she can sell it and obtain money in order to buy something precious for Jim:
"Something fine and rare and sterling--something just a little bit near to being worthy of the honor of being owned by Jim."
Climax: The climax occurs when Jim discovers what Della has done and what she has bought him for Christmas. Della has had her hair cut and sold in order to buy a chain for Jim's watch.
Falling action: The falling action occurs when Jim confesses that he has sold his favorite watch in order to buy hair combs for Della's quite long hair, which is now short.
They both realize that they have got rid of the most valuable things they had in order to get something for each other which turns out to be useless. However, they both turn out to be wise because their possessions do not matter as much as their deeds--they both wanted to make each other happy, which is the proof of true love.