aaw, what a cutie indeed!
Brakes: the lever should def not be hitting the bars when you squeeze it max. If it's anywhere near the bars the brake wire should be shortened. It'll stretch with use anyway plus the brake pads will wear down so you want it quite short on new brakes.
If you can squeeze the levers max and they don't hit anything, then the lack of stopping power is somewhere else. If you've been riding in grimy weather or using your brakes a lot the wheel rims can get a bit slick. You'll see a thin layer of black gunk. Scrub them well to remove brake pad residue and sand your brake pads a little to get them "fresh". Some brake pads are better "stoppers" than others, btw, maybe the cheapest way of improving your bike!
If you still have sloppy brakes it's probably the brake type itself and not much you can do. (The brake wire could be sticking in a bad cable housing, but that's more of a rust/rain/winter/longterm problem and not very likely on a new bike. To fix that you spritz a little thin oil in the cable housing and pull the wire back and forth.)
Winter riding is much less about badassery and much more about bundle-uppery. - malkin
1995 Kona Cinder Cone commuterFrankenbike/Selle Italia SLR Lady Gel Flow
2008 white Nakamura Summit Custom mtb/Terry Falcon X
2000 Schwinn Fastback Comp road bike/Specialized Jett