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Use USB stick as extra permanent storage.

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Lack of funds? I'm sure you can find an older but still usable hard disk that will give you plenty of room. Lowest price on a new hard disk is $49 [TigerDirect]. Maybe something cheaper on eBay or maybe even a liquidation or second hand place. You could have an issue with your 40GB hard disk. That is quite old. At one point it will die and you will be up sh?t's creek. I wouldn't take the gamble. Spend the few $$$ and get yourself at least a proper drive.