Preheat oven to 325°F. In a large mixing bowl, use an electric mixer and cream together butter, cream cheese, and sugar until light in color and fluffy.
Add egg yolk and vanilla extract and beat until combined.
Add flour, nutmeg, and salt and stir until all ingredients are combined.
Using a cookie press, press the cookies out onto (unlined) baking sheets about an inch apart from each other. If desired, sprinkle with colored decorator's sugar.
Bake for 15 minutes -- they will still be light in color when baked.
Notes
Don't use parchment paper lined baking sheets for this recipe as it will make it very difficult to use the cookie press.