Using tags to organize Evernote is by far the best solution. I find notebooks are not great for organizing notes because you end up having to switch back in forth between notebooks, where as it is much easier to switch between tags.
The real power of tags is the ability to nest them into categories (see the picture below). This way you can create subcategories. So for instance I have a tag called “Blog posts” and under that tag are tags that describe the content of those blog posts. So in this way you can use Evernote as an alternative to a social bookmarking site, like Delicious.
Nesting also minimizes the amount of tags you see in your menu at one time, allowing you to scan the tags you have and easily deciding where you need to find a certain note.
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