Newsletter: October, 2010

Avoid financial mistakes that can cause you problems down the road
The Vault October 2010: Don’t Make These Four Financial Mistakes
Money can be fun. It can help you buy things, take trips, and treat your friends. But money is also serious business—and there are certain financial mistakes that can cause serious problems in your life. If you fall into these traps, it can be hard to dig yourself out and even harder to achieve your financial goals.  So don’t be a chump—avoid these four financial mistakes. But first, let’s take a look at our Biz Kid of the month!
The partners in sneaker store Foot Traffik
Biz Kid$ of the Month: Foot Traffik
These young streetwear retailers learned a valuable lesson when they were just starting out. If you’re into collectible sneakers and street culture, check out their Web site at We spoke with one of the founders, Johnny Nguyen.

Tell me what your business is all about.
We have a retail store called Foot Traffik, which is a sneaker boutique.  We sell limited edition sneakers, exclusive apparel, some collectible / specialty shoes, and consignment shoes.  We cater to a niche market, and are trying to provide an experience — ‘sneaker lifestyle’ and streetwear culture.
I started it with two other partners, and now we have a fourth partner.

What is one of the biggest mistakes you made when opening your store?
When we first opened the store we held off getting an alarm system.  We had a lot of consignment inventory that people had trusted us with, and my parents suggested that we get an alarm system.  The week before we were about to get a system, a burglar broke into the store, stole $10,000 worth of inventory and caused some damage.

How did it impact the team?
It was a real hit to the morale of the team — we were riding a high momentum, especially after having a successful launch of the store.  But we didn’t take into consideration that this could happen and it was a real shock.

How did it change the way you do business?
Now I give more weight to my parents’ advice!  And now we all hope for the best but plan for the worst — we are more realistic, and don’t take unnecessary risks with the business.  It was a really humbling experience.

How is business now?
Things are going well, and we are starting to create our own brand based on the store’s ‘Foot Traffik’ name.  We have managed to bounce back from the robbery by working hard and staying focused on our goals.

What is your advice to kids?
The slogan for street culture is to ‘keep moving’, so that’s what I would say to any kid who’s made a mistake.  Don’t let the mistake paralyze you — get up and keep moving.  Don’t give up — it will work out if you keep trying.

Financial Mistake #1: Overspending
With so much cool stuff competing for your attention and your dollars, it’s easy to spend more than you make, or just spend too much on things you don’t need. The only way to build financial resources is to spend less than you bring in and save the difference.
The cure: Make a budget and stick to it. Save what you don’t spend. And, don’t be a shopping zombie—think about what you buy and whether it’s really important to you or not.  <>
Financial Mistake #2: Too much credit
Credit cards and loans can be useful. They can also be a trap. Interest charges can really add up if you carry a balance. And too much debt makes it difficult to save anything because you’re so busy paying for what you bought yesterday. Missing credit card or loan payments can really mess up your credit score, which can affect your ability to do things like rent an apartment or get a mortgage.
The cure: Always try to save up for major purchases rather than putting them on a credit card. And visit to reduce the number of credit offers you get in the mail.
Financial Mistake #3: No rainy day fund
Life happens…no matter how well-prepared you are. Unexpected medical bills, a car accident, or even a stolen wallet or cell phone can have you scrambling for cash—and tapping your long-term savings.
The cure: Open a rainy day fund in an interest-bearing savings account and save into it until you have enough to live on for several months.
Financial Mistake #4: No retirement savings
Do you want to work for the rest of your life? Probably not. So start saving for retirement now. The money you put in early has more time to grow (assuming you invest wisely), so every dollar you put in now is worth more in the future.
The cure: Open a retirement account (or have a grownup open one for you) and watch your money grow.