Michelle Singletary
Thursday, September 15, 2005; 10:14 AM

I've devoted a quite a few words in the past week to ways you can protect your financial records in case of a disaster. So far the methods have focused on physical protections, like portable fireproof boxes. But there is another way to keep your documents beyond the reach of natural or unnatural catastrophes.

Think digital.

Post reporter Yuki Noguchi tells us (Sept. 11, "The Digital Storage Solution") that consumers can transfer "everything from music to tax returns to an external drive usually no bigger than a hardback book."

As Noguchi writes, external hard drives can store much more information than CDs, DVDs or keychain-sized flash drives --- from 40 to 500 gigabytes --- and many can be set to periodically back up important files.

However, one of the bonuses of putting your important documents on a CD is that they can duplicated multiple times, allowing family members or friends who live in other areas to store an extra copy for you.

A more convenient -- though somewhat pricey -- option is an online storage service, which allows users to upload important documents to the Internet, then retrieve them from any Web-connected computer.

For more details on how to safely store your data, click here.

If want to learn even more about what you should do financially in the event of an emergency, read the transcript of my online discussion with Arthur Stein, a certified financial planner and vice president of First Financial Group.

Here's a sample of a few questions readers asked of Stein:

Fairfax, Va.: How are my financial records (bank account, checking account, saving account) protected in a tragedy like New Orleans? Where are the backup records stored? How do the people of New Orleans get access to the bank account and money? How does one pay bills and creditors in N.O.?

Arthur Stein: Hopefully, your bank, investment company, credit card company, etc. will have backups.

However, the best situation is if you have backups somewhere safe. Specifically, copies of wills, power of attorney, health care power of attorney, living will, burial instructions and trust documents should be kept not only at home, but also in a safe deposit box and with an attorney and/or anyone named as able to act on your behalf.

Someone should also have instructions about the location of the safe deposit box.

Other financial documents that need to have copies sent to an attorney, relative or friend, or placed in a safe deposit box, include: deeds to homes, titles to cars, receipts for and photos of personal property, and any other legal documents.

Finally, everyone should make lists of insurance policies, investments, real property, trusts, personal property, prescription drugs, names of doctors, and employee benefits.

Washington, D.C.: My mother was telling me a story a Japanese friend told her. In Japan, where they live with the possibility of earthquakes and volcano eruptions, each member of the family has a suitcase under their bed, with a change of clothes, prescriptions and/or prescription info, etc. (I'm sure it varies based on situation.) Also included is financial information, bank account numbers, and what have you. I suppose in a situation where one does not have access to their files, a computer, etc. this would come in very handy. So, in case something happens, everyone grabs their bag and goes. What do you think about this? I know where all my financial paperwork is, but in case of an emergency I sure would be running up and down stairs and in and out of closets looking for things!

Arthur Stein: That's a great idea. Maybe a backpack instead of a suitcase then you could also use the backpack for some food, water bottles, etc.

Online Auto Sellers, Beware

Trying to sell that rattletrap of an automobile that's costing you more to maintain than it's actually worth? Then you may have thought, like many other consumers, that you could probably get the best deal by selling online.

But some of the offers you get may not be legitimate.

In this week's Consummate Consumer column (Sept. 11, "Have They Got a Scammy Deal For You") Don Oldenburg writes about this growing con game:

"Known as the 'car-selling scam,' the 'overpayment scam' and the 'criminal cash-back scam,' this tricky bit of fraud seems more credible than some. Partly that's because it usually involves a few thousand dollars tops," Oldenburg reports.

Typically, this is how the scam works, Oldenburg says: "You advertise a car for sale online. A fraudster posing as a buyer responds via e-mail agreeing to purchase the car for the asking price. ... Next, the scammer persuades the buyer to accept a cashier's check or personal check for significantly more than the agreed-upon price."

The key to the scam is getting the seller to deposit the check. In many cases the check does clear and the seller sends the excess funds to the con artist. It's not until days or even weeks later that the seller finds out the buyer's check was counterfeit or it bounced.

Oldenburg says this scam relies on common misunderstandings about the check-clearing process. Bank workers will deposit the check and tell the seller it requires 48 hours to "clear," at which point the seller can withdraw the money.

"Most people assume that means the check is valid. But the real check-clearing process can take weeks," Oldenburg writes.

The bottom line here: Never accept a check, certified or otherwise for more than the agreed-upon price of the car you are selling.

Also keep this in mind: This scam isn't limited to car sales. Check-fraud schemes have many variations, targeting all Internet auction sellers of high-priced items.

Penny-Pinching Practical Tips

Anita Platt of Plantation, Fla., writes, "I use the plastic sleeves that the newspaper comes in to place the contents of the cat litter box and "pooper scooper" leavings from the dog. I wash and reuse Ziploc plastic bags, as well as the disposable plastic containers such as Gladware, until they wear out."

Jean Jones of Quincy, Mass., says, "I cut up old clothes for rags instead of using paper towels. And we collect rain water by putting a 33 gallon trash bucket under the downspout, then setting up siphoning hoses to distribute water to three other trash barrels, so we collect over 100 gallons of rainwater every storm."

Financial Fact vs. Fiction

Myth: Julia Bradley of Boston asks: "The average financial planner suggests that a typical 30- to 40-year old should be maxing out their 401ks and IRAs to help build a retirement nest egg. I am worried that my hard-earned nest egg will dwindle away in future decades once the baby boomer demographic starts liquidating theirs. Is it a money myth that someone my age (I am 39) should be maxing out 401k plans?"

Financial Fact: Although there are some who would confirm this reader's fears, just as many other financial experts would say this myth or theory is false.

In fact, in a column last year (May 23, 2004, "What the Boom Will Do in 2010") former Post investing columnist James K. Glassman cited a report that debunks the myth that retiring baby boomers will pull so much money out of the stock market that it will crash.

"The most persistent investment cliche about baby boomers is that, as they start retiring, they will pull their money out of the stock market. Because of this decreasing demand, stock prices will fall and keep falling, so you should start moving into bonds and cash right now," Glassman wrote.

However, he pointed to a report called "The Next American Dream" issued by Citigroup Global Markets that suggested the stock market will not collapse in chaos because of retiring baby boomers.

"The Citigroup report throws cold water on this hoary hypothesis. Baby boomers plan to keep working and earning longer than their parents, they are remarkably good savers, and they have embraced the 'equity culture.'"

Don't believe Glassman? Then read this Post Magazine article (Sept. 11, "Heaven Can Wait") by Paula Span in which she profiles one boomer who won't quit ... working.

"The experts have come to a strikingly widespread consensus: Never mind that golden-years stuff. Keep working," Span writes.

Are you wondering if what a so-called financial expert told you is true? Do you have a co-worker who thinks he knows everything about personal finance and you want to confirm his advice? Send me any "Money Myths" that you want help dispelling. Drop me a line at colorofmoney@washpost.com. Put "Money Myth" in the subject line.

You are welcome to e-mail comments and questions to singletarym@washpost.com . They may be used in a future column or newsletter with the writer's name unless otherwise requested.