Every year we all say the same thing - "let's not go mad this Christmas" - and every year we blow a massive hole in the budget.
Christmas is the one time when no one wants to skimp.
Joanne Wright, personal insolvency partner at Begbies Traynor, Birmingham, says Christmas always heralds an increase in people approaching her for advice.
In November the Department of Trade and Industry published third quarter figures, which showed 17,562 personal insolvency cases, up by 46 per cent from a year ago. The figures show no sign of abating, and the additional spending because of Christmas can be the straw that breaks the camel's back.
Ms Wright said: "Some people take the view that 'we'll worry about it after Christmas'. Unfortunately when the credit card bills land on the mat and they are all 'maxed' out, they have nowhere else to go. Invariably the December payday tends to be early and means having to stretch the salary to five weeks before the next one brings everything to a head.
"January may be cold and miserable, but that's when the reality of the situation finally dawns and people realise that they can no longer juggle their finances and something must be done."
Suggesting they consider an individual voluntary arrangement, freezing interest, she went on: "It allows people to keep sufficient money to satisfy their day-to-day living expenses, but at the same time make one affordable monthly payment to a 'supervisor' for distribution to creditors. Clients find the procedure brings a welcome relief to the nasty letters dropping through the door that they dread opening."
Top tips for Christmas budgeting are: n Agree with friends and relatives that you will only buy the children's presents this year n Try and work out a budget for each person you need to buy for and stick to it n Plan what money you will need in January and put this money from your December salary to one side n If you are struggling, call the credit card companies and agree a reduced payment but just for one month n Resist the temptation to stock the cupboards with endless goodies. Experience tells you that you will only end up throwing them out in January
And consumers are being warned not to fall into the trap of eroding the equity in their homes to help pay for goods bought during the festive period.
Andrew Frankish, managing director at Mortgage Talk, which claims to be the UK's leading mortgage broker, is advising consumers in general, and homeowners in particular, to exercise caution over their spending this Christmas.
He says some homeowners are encouraged to borrow and spend by a credit industry that should know better.
"In the run-up to previous Christmases, I have seen a number of mortgage brokers clearly trying to persuade homeowners to remortgage, simply so they can borrow money that will be spent over the festive period," said Mr Frankish. "While I'm certainly in favour of everyone having an enjoyable Christmas, I'm concerned that people should think very carefully about the implications before remortgaging or taking out a secured loan to fund their seasonal spending.
"Some brokers have rightly pointed out that, with mortgage interest rates still historically low, it is far cheaper to borrow money against your property than to take out an unsecured loan or buy on a credit card.
"However, while this might seem like common sense on the face of it, consumers should be more aware of the total cost of the interest repayable."
Instead, he argues that borrowers are better advised to switch home loans purely to save on their monthly repayments.
"There are some excellent fixed rate and discounted deals available at the moment, and homeowners should consider carefully the merits of changing their lender in order to reduce their monthly outgoings."
