smart spending

Storing financial files digitally

A modest amount of homework, however, can ensure that the online service you select meets your space and security needs. After an initial backup, many services only back up those files that have been added or changed, making subsequent backups significantly faster.

When shopping around, ask about how many gigabytes of storage you'll receive and how many times a month you're permitted to access the service. Also, ask if there are any additional costs for uploading multimedia files -- a key question for taxpayers planning on storing photos of possessions they've donated to charity.

Schulz also recommends asking about security precautions taken to protect your data. Find out whether data is password-protected or data-encrypted. If technical jargon such as "SSL encryption" sends your mind spinning, Schulz recommends going with "a known entity."

"Would you park your most important documents with an unknown entity just because it has space for rent?" he asks. "Probably not."

However, remember that even the biggest names in the industry can wind up gobbled by a hungry competitor.

"These online storage service companies can be bought and sold," says Dennis O'Brien, president of Coastal Financial Advisors in Farmingdale, N.J. "And you don't really know what's going to happen to your data once a provider has been sold or merged with another."

For this reason, experts recommend asking a potential provider about the fate of your data in such an event.

2. USB flash drives 

Typically weighing less than two ounces and about the size of a thumb, a USB flash drive packs a powerful punch when it comes to storing important documents.

With storage capacities ranging from as small as 512 megabytes to 128 gigabytes, these portable devices easily slide into the USB port of any desktop or laptop computer. Users can store, swap and share documents, music, video clips and pictures.

Much like a standard hard drive, you can save material on USB flash drives again and again for indefinite usage. Many offer protection in the form of a secure password. What's more, because USB flash drives do not contain any internal moving parts, they are known for their durability.

"It's very convenient," Jablonski says. "You just plug it in and move all your documents over."

With prices starting at around $10, it's no wonder USB flash drives have taken the personal storage world by storm.

Still, there are drawbacks that can offset the benefits of price and portability.

"More flash drives are lost and stolen with important information on them than anybody knows or cares to admit," says Schulz. "Flash drives are great, but they are probably your biggest point of vulnerability."

Jablonski agrees the drives are easily lost, and says that they might not be the best method for long-term storage.

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"They're considered permanent storage, but flash drives have a shelf life," he says. "One day it could completely fail on you, and that's the big disadvantage."

In the end, only you can predict how likely it is you'll misplace a USB flash drive. If you're the type to find your car keys underneath the bed and your cell phone wedged between car seats, you might want to consider a larger-sized storage option.

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