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The last time you heard that a friend’s computer has crashed, didn’t you vow to do a better job at regularly backing up your hard drive? Has the tale of an aged retiree on a fixed income ever prompted you to check the status of your 401(k)? And when you hear that someone’s wallet or purse has been lost or stolen, don’t you start imagining what you should be doing to safeguard the contents?

Don’t just think. Do!

There are all sorts of mental and physical precautions you can take to prevent yourself from misplacing your wallet or having it stolen, but today, we’re going to review the three main options for protecting yourself in case your wallet IS ever torn asunder from your loving embrace.

1) WALLET PROTECTION SERVICES

Way back in the pre-web era, when dinosaurs roamed the Earth and DiscoverCard was still a novelty, they offered cardholders a service called The Register. For $33 dollars for three years of service, cardholders could fill out an extensive form listing every credit and identification card, number, expiration date and 800 number and mail it in. (Yes, people still mailed this kind of personal data. That’s right, in 1988, a little 25 cent stamp offered the vaunted protection equal to shouting Civis Romanus! (“I am a Roman citizen”) in ancient days.)

In return, if your wallet were ever lost or stolen, one call to the service would have operators scampering about to identify your missing cards and documents, call all of your card issuers (including your Department of Motor Vehicles and your local police) to report the loss/damages, order replacements, and protect your reputation and credit lines with the initiation of anti-fraud measures.

Ah, but that was long ago and far away.

Recovery services through your credit card company still exist, like The Register’s modern-day equivalent DiscoverCard’s Wallet Protection Services. Individual identity theft protection companies like Trusted ID, IdentityGuard, and WalletLock from Lifelock also offer lost-wallet services. These are sold at rates ranging from $2.99-$40/month and often include identity theft protection services, like credit report monitoring.

Pros:

• Peace of Mind
• Limited Effort

If you have many, many credit and other cards in your wallet (in other words, if you ignored my advice here and here), if you place a high dollar value on your time or are easily annoyed by the Muzak you will hear while waiting on hold to report each missing item, if you are comfortable letting one institution have control over all of your personal information, this kind of service can suit your purposes. Plus, if your wallet escapes you during travel, when you’re least likely to be able to make use of options #2 and #3, this will let you sleep soundly on any business or pleasure trip.

Cons:

• Monthly charges
• Relinquished control (concerns over security and accuracy)
• Extra effort to update records

Aside from having to pay for what amounts to an insurance policy for a tiny piece of (portable) real estate, you may experience stress over relinquishing control of your data to a third party–especially if you are more fearful of the hacking of corporate records than someone sneaking into your office to spy on your computer.

Also, concern over bureaucracy and trusting someone else to correct your records accurately can leave you second-guessing the service. If you spend all that money, month in and month out, over the years, you don’t want to check up on your service to make sure they adequately handled every call.

2) COPY THE CONTENTS OF YOUR WALLET

Alternative 1: PHOTOCOPY

For every email you’ve received from wives of Nigerian dictators hoping to share a small fortune with you, you’ve probably received (from my mom, if not your own), advice to protect you against the dangers of modern life: how to prevent being carjacked, how to tell if you’re having a heart attack, how to alert other drivers that an evil mob boss has locked you in the trunk of his car.

So too, you have probably received the advice to photocopy the front and back of every card in your wallet. This ensures that you:

A) Have a pictorial record of everything you carry in your wallet
B) Are aware of all of your card numbers, the exact name (with or without initials) listed as cardholder for each, and expiration dates
C) Know your CVV Security Codes
D) Have the 800 or other toll-free numbers to report a lost or stolen card

Pros:

• Everything listed in A-D above
• No monthly expenses incurred

Cons:

• You’re unlikely to take the photocopied page(s) with you if you are traveling.
• You have to make all the phone calls yourself.
• You’re responsible for safeguarding the photocopy and/or updating when you add or change cards.
• Access to a public photocopy machine requires a small charge
• By emptying your wallet in public, you risk being distracted, leaving items behind in, or near, the copy machine.

Alternative 2: SCAN

You can accomplish the benefits of Alternative 1, with fewer of the cons, by scanning your cards instead of photocopying them.

If you have easy access to a standard scanner (the kind that looks like a photocopy machine), it works the same way…lay the items in related (ID cards, credit cards, etc.) columns/rows, copy, flip them like pancakes to the other side, and copy again.

If you use a portable scanner like Neat Receipts, the process will take you longer, as you’ll be doing one at a time, but even this has a built-in advantage: by methodically taking one item at a time out of your wallet, scanning it and returning it, there’s relatively little likelihood that you’ll lose anything.

Whichever alternative you choose:

• Select a safe copy/scan location
• Return everything your wallet (triple-check under the copier lid)
• Safeguard your copies of your records

3) MAINTAIN A DIGITAL DATABASE OF YOUR CARDS

Instead of photocopying or scanning, create a spreadsheet with the following information in columns along the top:

• Card/Item
• Issuer (i.e., bank, credit card company, library, etc.)
• Expiration Date
• Name on Card
• Number on card
• Security Number
• 800 or toll-free number to report loss
• Web site URL for each issuer (with username/password)

Spreadsheets aren’t your only option, of course. If you use personal finance software like Quicken or MSMoney, you can enter this data in your system.

One caution: There are multiple online personal finance services, like Wesabe and Mint, that will allow you to maintain this information on their servers. Paper Doll loves the web, but at the risk of sounding like a Luddite, I’m not yet comfortable enough with online security of smaller web companies to recommend this method.

If you’re a controlophile (and doesn’t that sound better than “control freak”?), I’d advise sticking with a system you can maintain at home, without access to the internet.

Pros:

• No ongoing charges
• Easy to update
• Easy to safeguard file with a password
• Portable for trips, if you carry a password-protected flash drive

Cons:

• More labor-intensive (to start) than the other options
• You must double-check against sloppy typing, especially of numbers
• You must take pains to guard the security of your information
• You’ll still have to call each number in the event of a theft or loss

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PUTTING THE PREPARATION TO WORK

Whichever of the above options you choose for protecting your wallet in advance of a catastrophe, please know that time is of the essence once you realize your wallet is gone.

With most cards, as long as you make an effort to contact the card issuers once you know your wallet is missing, your maximum exposure is $50/card. Companies will often cover all fraudulent charges as long as you alert them in a timely manner, and obviously, alerting them is easier when you know WHAT you’ve lost.

If your wallet is stolen and you selected options #2 or #3, you must hunker down with a pen and pad of paper to call and report each missing item. Next week, in the final post of this series, we’ll walk through all the steps of what to do if your wallet has disappeared.

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So, off you go–index the contents of your wallet and you can sleep easily tonight. Unless you haven’t yet backed up your computer or checked on that 401(k)…