Time for some gentle inquiries - who really wants a present?

You can tell it's Christmas because the TV advertising has changed. Adverts are offering interest-free credit and short -term loans to cover cash shortfalls and celebrities are encouraging individuals to spread the cost of Christmas by saving now - but for Christmas 2011! The cynical might feel that the recession had never occurred as individuals are encouraged to spend now and think about repayments later.

The problem at this time of year is that the pressure is on to deliver a certain experience on one specific day. People put themselves under extra financial pressure by borrowing money that they will still be repaying next Christmas.

The growth of payday loans companies is an indication of just how desperate some people are at the moment. In one example, if you borrow 100 you pay 29.50 for every month in which the debt is outstanding - an APR of 2222.46 per cent.

The firms offering these services say most of their customers repay the debt so the actual amount repaid is very little. But if you need to borrow money at those rates of interest then there is clearly something seriously wrong with your finances and paying extraordinary rates of interest will not improve that financial situation. It will make it worse in the long term.

The first step in reducing debt is simple but often the most difficult. Recognise that there is a problem - and if you believe that a payday loan is an attractive proposition then you definitely have a problem - and act upon it. Don't spend what you don't have. Better to deal with your problem now than spend and think about dealing with it in a month's time.

At Christmas, the pressure to spend can be enormous but you might find with a gentle inquiry or two among relatives that they would rather not spend anything on you and don't want you to spend on something for them. There is an assumption that if your children don't get exactly what they ask for, they will never forgive you. But ask them what they got last year for Christmas and they will probably barely remember. There is no question that they would rather have a more relaxed parent who is not fretting over money than some expendable item which they will discard within the month.

This is easier said than done. But it can be done and, if your finances are stretched to breaking point and giving you sleepless nights, you must act to resolve the issue because things may be about to get worse.

Make this Christmas one where you spend what you can afford and start 2011 without worrying whether you are going to be able to cover the cost of the festivities. Make your New Year resolutions now about resolving your finances before the damage is done.

l Bryan Jackson is a corporate recovery partner with accountants and business advisers PKF