How do I set up Time Machine on my Mac with my new Time Capsule?

I can still remember the old Apple Mac ads where they talked about the "computer for the rest of us" and showed how the user's guide was only a 15-20 page brochure, rather than a 200-page notebook for a DOS machine. The joke we had was that it marketing based on the "thud factor" and it's still true: Apple products still tend to come with tiny little brochures, just enough to get you started. And sometimes not even that. :-)

Anyway, that's a long, roundabout way of saying "no problem, we can get you started!"

Once you have your Time Capsule set up and your Mac hooked up to it via either direct Ethernet or wireless, all you really have to do is launch Time Machine (which should be in Applications --> Time Machine. Important first step: make sure your app is up-to-date!

Since you've never run it before, you should see this:

Click on "Set Up Time Machine" and you'll see this (eventually. For some strange reason it an take 30 seconds or more to progress past this point):

Before you eagerly click on "Choose Backup Disk" I strongly suggest that you check "Show Time Machine Status in the Menu Bar" as it's darn helpful. Next you should see your Time Capsule with whatever name you gave it when you first set it up (if you haven't yet set it up, do so with Airport Utility, which can be found in "Applications"):

Pick your device (just in case you have more than one, which would be cool, but expensive) and click on "Use for Backup". Now you'll get:

Enter the appropriate password (two comments here: first, I don't know why it says "enter account and password" when you can't actually enter an account name, and second, I strongly strongly! recommend that you always set passwords to maximize your security, even on a network you think is only you'll access).

Now, finally, you're up and ready to have Time Machine start doing its backup magic.

Since you checked the "show menu" option (right?) you'll also be able to see what's going on right on your menu bar with the nifty Time Machine menu:

Now the longest and most tedious part: the first full backup. For my setup, it was a matter of streaming and organizing almost 60GB of information and, yes, it took a few days to complete. If you can, a handy tip is to hook your computer up to the Time Capsule via Ethernet and it'll run a lot faster, but my Macbook Air doesn't have a built-in Ethernet connector.

If you want to exclude some directories (like "Applications") then simply click on "Options" in the Time Machine preference pane, which you can easily reach by choosing ""Open Time Machine Preferences..." from the Time Machine menu, or going to Apple --> System Preferences... and clicking on "Time Machine".