In addition to the system files and applications, what other types of things do I skip? I don't back up any ripped DVD or Blu-Ray movies, again because there's no need for versioning, and they're backed up at other levels of my strategy. I also exclude any Parallels or Fusion virtual machines as both apps include their own snapshot features for versioning, and I back up the full virtual machines elsewhere.
By not using Time Machine for these types of files, I've freed up hundreds of gigabytes of space that can be used for multiple versions of my data files. I do, however, have Time Machine back up my iPhoto and iTunes libraries, along with all my work and personal data files. These are files that I want to be able to get back quickly, or access older versions with a minimum of hassle.
Level 2: Boot clone
A boot clone is not a perfect copy of your favorite pair of cowboy boots. Rather it's a perfect copy of the hard drive that boots your Mac. Having a clone is critical — if your boot drive ever has a fatal error, you can connect the clone drive and reboot, and be back where you were with a minimum of disruption.
As I don't like leaving a clone drive connected all the time, I have a bare drive that I insert into a Sabrent 3 drive dock on a regular schedule. (See my Migrating away from FireWire hard drives article for more on this drive dock and how I put it to use.)
I update my clone about three times a week. Because the vast majority of my files live on the RAID, it's not critical that the clone is current to the minute. Using CCC4, I created a clone task that's set to run on disk mount. Updating the clone is as easy as dropping the bare drive into the drive dock; CCC4 sees the drive mount, and starts updating the clone. Typically the whole task takes about five minutes, as only changed files are updated. (The initial clone takes much longer, of course.)
When the clone is complete, I remove the drive from the drive dock and put it back in its storage box for a couple of days. If my boot drive ever fails, I know I can get back up and running in a hurry, and probably not be missing anything other than some modified preference files.
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