On one hand I totally get where she is coming from. When we first became parents, we went from 0 to 4 kids in two weeks, all of them under age four (they were a foster sibling set). We were incredibly blessed that many people stepped up to give us hand me down clothes and toys for our kiddos. In fact, within a few weeks we had 4 full bins of toys! I tried my best to rotate these toys but they always managed to take over the house. When the kids were reunited with their mom, we sent the vast majority of the toys with them. Since then I have continually been reducing the number of toys we own, and keeping fewer toys out at a time when we do toy rotations (or at least I try... sometimes the number of toys around the house seem to multiply despite my best efforts). Having fewer toys around helps keep me sane and the kids really don't seem to notice (especially when I do a good job of rotating).
There is one thing that concerns me about this idea. Taking away your kids toys is not going to stop them from being greedy.
"If with Christ you died to the elemental spirits of the world, why, as if you were still alive in the world, do you submit to regulations— “Do not handle, Do not taste, Do not touch” (referring to things that all perish as they are used)—according to human precepts and teachings? These have indeed an appearance of wisdom in promoting self-made religion and asceticism and severity to the body, but they are of no value in stopping the indulgence of the flesh." Colossians 2:20-23 (emph. mine)So taking away your kids' toys to help them be less materialistic? Maybe if they don't have toys they appear less materialistic and more content. But setting up these regulations in their lives will not stop the indulgence of the flesh. Only the Holy Spirit can change your children from the inside out.
Pray for His mercy and soul cleansing work in your children.
And maybe you should take away their toy or at least get rid of a good number of them. But don't expect that to save or sanctify them.