Under the contact information area when working with a contact, there is the Update Status area. The second option is to record a private note about your contact. It can be anything, from a phone conversation note, to a note about seeing something in the news about them.
When you type in your note, click Submit to save it. This is a private note, visible only to you.
Notice the buttons under the Update Status box. The Notes button gives you access to all past notes you made for this contact. It’s a powerful communications tool to be on top of things when you’re talking to them.