2. Get a hardware firewall.
This could be number 1. but I think people should have AV and software firewall very least; then consider a hardware firewall.
A software firewall allows intruder in the house to snoop around but locks all the doors within. A hardware firewall locks the house. Hackers are for the most part lazy, talentless idiots who brainlessly run 'kiddie scripts' written by more enlightened idiots. These low brows are lazy and mindlessly seek "low hanging fruit' most of these hacks can be deflected with a low cost SOHO hardware router firewall. Linksys, Belkin, Netgear and Cisco are sources for decent hardware router/firewalls. The router may also be used to share the internet connection among sever PCs. If you are a SOHO I would advise a higher end solution which filters web content such as a Cisco ASA or Cisco PIX. These can be sourced on auction sites.
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