The best way to protect your sensitive data is to encrypt it, and we love free, open source TrueCrypt for that task. For the utmost in security, you can not only encrypt your files but hide them in a hidden volume within another encrypted volume.

This makes that hidden folder invisible to everyone who doesn't know it exists. The larger volume (whether you encrypt your whole drive or just a few folders) can act as a sort of decoy—useful if you're ever forced to decrypt your laptop or that password-protected container that's not hidden.

The video above from Tinkernut walks you through creating this secret encrypted drive within a drive using TrueCrypt.

Weekend Hacker: Make a Secret Encrypted Drive | Tinkernut

Dear Lifehacker,
I've read a number of articles recently about encryption and keeping my personal data safe. I can see the need for protecting financial information, but what other info do I really need to be concerned about? Things like my photo album, music collection and video library (which by far take up the majority of my hard disk space) don't seem like the things that need to be encrypted so much as just backed up—so full disk encryption seems a bit like overkill. Right?

Signed,
Unsure About Security

Dear Unsure,
It's great that you're thinking about protecting your files, with all kinds of snoops out there (from big government to identity thieves). You're right, though—you don't need to protect every single file you store or send (especially the MP3s). Financial records are the obvious types of information you should protect, but there are many other kinds of files you should encrypt as well. Encrypting these files will make sure that even if someone gets through your firewall or if your laptop is stolen and your password guessed your data will still be protected. (Once you've decided which files to password-protect, encrypting them is easy using open source TrueCrypt, 7-Zip, or Mac's built-in Disk Utility. You can encrypt your email with PGP.)

Basically there are two kinds of sensitive data you should encrypt: personally identifiable information and confidential business information/intellectual property.

Personally Identifiable Information (PII)

Personally Identifiable Information or PII is any kind of information that can uniquely identify you, such as your social security number, driver's license number, or full name. Because thieves can easily steal your identity if they gain access to your PII, it's really important you protect all of the documents you have that contain this information. According to the National Institute of Standards and Technology (NIST), this information includes:

• Name, such as full name, maiden name, mother's maiden name, or alias
• Social security number (SSN), passport number, driver's license number, taxpayer identification number, or financial account or credit card number
• Address information, such as street address or email address
• Personal characteristics, including photographic image, especially a face image
  or other identifying characteristic; fingerprints; handwriting; or other biometric
  data, such as retina scan, voice signature, and facial geometry
• Information about an individual that is linked or linkable to one of the above
  categories, such as date of birth, place of birth, race, religion, weight, activities,
  geographical indicators, employment information, medical information, education
  information, and financial information

Expanding on the above, you should add to your encryption container:

• Bank account statements, credit card statements, tax records
• Medical records like health insurance benefits and medical payments
• Work performance reviews
• Educational records, thesis

That may sound like a lot, but when you think about it all of this data boils down to your vital information (health, education, work, finances)—easily organized into folders that you can encrypt. So in addition to your financial statements and tax folders, also encrypt your folders with basic life information (health, education, work) or however you organize them.

It may go without saying, but you should also have any security-related things already encrypted: Passwords and PINs, for example (it's easiest if you have them all stored in a password manager).

Encrypt Confidential Business Information/Intellectual Property

If you keep any files on your computer that are work related, you may need to encrypt those as well—especially any that contain individual customer information. (As a former tech director who worked in the field of consumer marketing, I know that protecting personal customer information is paramount.) If you work in an industry like banking or health care, you'll also be subject to regulatory standards for protecting consumer information.

Business information or "secrets"/intellectual property may need to be protected too—financial reports, legal docs, patents, product releases, research and development data, and so on. It's often said that when laptops get stolen it's not the hardware that's most valuable to thieves, it's the information on it.

Two Tests for Whether You Should Encrypt Or Not

Here are two questions you can ask about any file you're considering encrypting:

• If the file was on paper instead of in digital form, would you shred the paper before throwing it out?
• If this information was leaked or posted to the interwebs tomorrow, could there be terrible repercussions or could someone do something malicious with it?

Keep in mind, too, that you should safeguard all the media and places where these sensitive or confidential files may be found: Your backup files, for example, email PSTs, a portable drive you use for backup, your smartphone.

All of this said, you probably have much more data that's not sensitive and doesn't require cryptography. Protect the ones that do, and you can rest easy. And if you want a faster, easier solution, a full disk encryption is a good idea—especially on laptops that can get easily lost; the full disk encryption will protect all your data and ensure no one can break into your Windows computer or your Mac. You can enable full disk encryption using File Vault on the Mac, BitLocker in Windows, or TrueCrypt.

Love,
Lifehacker

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OS X: Google Drive is finally here, promising awesome Dropbox-like online storage and file syncing—but also the same security and privacy caveats that come with storing information on cloud servers. Macworld offers this handy file encryption tool that works with Google Drive for drag-and-drop encrypting on your desktop.

It's an Automator action from Armin Beigel called "Create Disk Images From Files." Once you download the script and unpack the zip file, all you need to do is launch Automator on your Mac then import the action and drag it into the Automator workflow area. Select Google Drive as the folder in the options settings by browsing to the folder in Finder. To make this a password-protected file in Google Drive, click the checkboxes to compress and encrypt the image. Then in the file menu, save the application to your desktop (I named my shortcut "Encrypt File on Google Drive").

Now every time you drag a file to that shortcut, you'll be prompted for a password and the file will be encrypted and saved to your Google Drive folder on Google. Neat, right?

Below is the Macworld article with more information and the download link.

Other options, for Mac or Windows users, are to use Truecrypt to encrypt your files or use password-protected zip files before storing them on Google Drive (or Dropbox or elsewhere) for the ultimate in security.

Automatically encrypt files for your Google Drive | Macworld

In general, you want to avoid writing down sensitive information and just keeping it in your head but that's not always an option. If you have to write down a password, or some other sensitive information, you can use a Caesar Cipher to quickly encode and decode that message on your own.

Caesar Ciphers are very simple methods of encryption because the work by shifting the alphabet over a few characters and matching up the letters (see the picture above)—in fact, if you've ever used any cypher as a kid, it was probably a Ceasar Cipher. This cipher turns a statement like "The quick brown fox jumps over the lazy dog" into this:

WKH TXLFN EURZQ IRA MXPSV RYHU WKH ODCB GRJ

The first letter is a W because it's three letters after T. K is three letters after H. H is three letters after E. Basically, you can easily decrypt that message by just rewinding the alphabet by three letters. It's easy to decrypt if you take some time to figure it out, but it's plenty to keep non-motivated people from spying on your stuff.

This is just one useful personal encryption method of many. For more, read this guide.

Caesar Cipher | Wikipedia via Reddit