I have an excel document with the type / website or location / user name / password / account info.
It's password protected, ironically, and on our desktop. But it's just MyfirstnameHisfirstname... which I know breaks ALL password rules. But then I can make the other ones more complicated and I can change them alot without worrying about it. Instead of the "favorites" to keep the website link, I just go into the spreadsheet and click on the link.
At work, however, we use something called "Password Vault" which stores and changes your passwords at various intervals and then automatically enters them. You only have to remember ONE username, which we change every 90 days. I don't really like it.
ETA - we back everything up on a "time capsule" which is basically a 2nd hard drive. Forgot to add that...... Yes, if we just kept it on our desktop that wouldn't be good :-)