Are we having a wedding?

So we were so excited started planning right away! We started buying things for favors , center pieces etc. We got everyone's address; I even perfected our invites!

We even got the venue contract and FMIL looked it over.... *cue the tears and disappointment) she said it seemed nice but she didn't like that we'd get stuck with the bill if our guest are to rowdy and break something. ( which i understand the venue) she then went on to say we can't afford a wedding and that some people shouldn't be expected to travel and pay for their rooms. My fiancé had this face of pure anguish and on e we ended the call he just hugged me as hard as he can.

We are now trying to figure out what to do with the things we have bought some custom and how to tell people. Advice please.