My dad's parents lived in New York City for as long as I knew them. They lived in a not so nice neighborhood in a building where Grandpa Peter was once mugged for his hearing aid in the main elevator. Grandma Margot was pretty savvy and developed a great system for storing her valuables in a sketchy environment: she carried her money about town in little pockets that she hand-sewed in her underwear. Margot carried a purse, of course, as well, but it was just a decoy. It was always empty.
I fully agree that when in unsafe or unfamiliar environments, it's best to keep your money close. I haven't gone quite as far as underwear pockets but every day of our trip I wore a passport holder filled with our money, credit cards, and (duh) passports diagonally across my body, under my shirt and bra, tucked in to the back of my pants. No one was going to be able to pull that thing off my shoulder or snip the string to allow my valuables to fall. Of course things get a little bit sweaty and gross, so it's good to keep at least the passport in a ziplock inside the pouch to keep it fresh and dry. But in six months on the road, we had zero pickpocket issues.
Side note: yes I wore the passport holder every single day. Neither I nor Patrick trusted him with custody of our valuables.
But for those of you who really like the underwear idea, no reason not to go for it! Pull out that needle and thread! Or, take it to a whole 'nother level with the underwear Diversion Safe. These babies feature a secret velcro closure and "special markings" to deter thieves. As the website boasts, "even the most hardened burglar or most curious snoop will 'skid' to a screeching halt". Pretty clever, but I'm not sure Grandma Margot would approve.
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