Your hardware, your software (and probably your music collection) can all be replaced at an acceptable cost. Technology really isn't all that expensive. On the other hand, your personal data is not replaceable. Your photos, documents, tax information, videos, and anything else that you have created is not replaceable.
Option 2: Local Backup
This option is the one we recommend between the two. You can use an external hard drive or a large flash drive, depending on how much data you are backing up. Since local storage is upwards of a million times faster than online storage, this method doesn't balk at large files like cloud-based backups can.