Such a strange mindset to me. People give gift money to a child, and there you squirrel it all away for later when they are making money on their own?

Unless explicitly mentioned by the giver, I would use this money to enhance their childhood experience. Family trips, cool science projects, school clothes and supplies, etc...

Okay I will edit to 6k.

Are you sure you want to do this? There are some priceless experiences that you can only have as a child / young teen. Wouldn't the money be best used now for a once in a lifetime experience vs when he graduates college, and likely gets a job where he makes that much in a week?

Gee thanks mom and dad, I finally get my first real paycheck for 2k+ and you give me another $1200 6000 dollars that is just lost in the sauce.

So it makes no sense to eat 9k to avoid a chance at spending 4k.

Let's say the car has a 25% chance of the transmission going out.

You have an expected gain of 8k by keeping the car and expected loss of 8k by getting rid of it.

This isn't always the best way to frame situations, especially if the loss is catastrophic (for example say you have a 1% chance at a 500k loss) but since the loss in this case is less than what you are spending up front to avoid it, it makes no sense to do so.

This is like paying 1000 dollars a month to insure something that is worth 5000 dollars.

Selling the car for a loss just to avoid the risk of needing a new tranny is not a good idea. Just keep the car and drive it. The risk of needing a major repair on a 2017 is low.

And is the new tranny over 9k?