Death, Taxes, and Auto Expenses Are Guaranteed

Death, Taxes, and Auto Expenses Are Guaranteed

Life guarantees are not limited to death and taxes. If you live in a suburb of a North American city you probably have a car. The only thing guaranteed in car ownership is that it’ll be a never ending drain against your net worth. Whether you buy new, used or lease, you’re going to spend money you won’t get back unless you're in the business of arbitrage. Gas, insurance, maintenance, unplanned repairs, parking, tickets and accidents are all heavy hitters to your cash flow. It’s a never ending expense which depreciates in value every year if you own one. It’s arguably the worst investment yet one of the biggest necessities you can have if you don’t live in a big city with good public transportation.  

Transmission repairs. Have your rainy day savings fund on standby.


That was the cost to replace/repair two major components on my 2006 Acura TSX (6 speed manual) after I heard a grinding / whistling noise coming from the engine bay. My mechanic’s initial diagnostics indicated that the noise was due to a worn clutch. It was time to have it replaced, it was original (10 years/177k KM). I opted to pay a slight premium for the better quality OEM replacement kit as I planned to keep the car another 4 years. In total, I was prepared to shell out ~$950 (parts and labour) to replace the clutch, a key component of a manual transmission car.

$950? No big deal…

After authorizing the repair for the replacement clutch I got a call a few hours later that I was not prepared for:

Mechanic: You’re not going to want to hear this dude but you also need a new transmission!

Me: WTF!? Screw off man!

Mechanic: I’m serious, we can’t use it. There's a hole in the casing.

Me: Fuck.

When they took apart the clutch they noticed a hole in the transmission casing (see below for the exact spot I lost $2K). It turns out a clutch bearing broke off and went right through the metal transmission casing! This caused the transmission fluid to slowly leak and the transmission ran dry which damaged the 6th gear, a few bearings and some other ridiculously small pieces of expensive metal that the Acura “stealership” charges an arm and leg for.


My transmission true up options were:

1) Swap in a used transmission.


·       Scrap yards are full of them, maybe I could find one for cheap.

·       Manual transmissions are generally more reliable than automatic ones, even used ones.

·       Most used ones come with a 30-90 day warranty. Any issues would be obvious.


 ·       You don’t really know what you’re getting, could be a ticking time bomb.

·       Finding a 6 speed manual transmission for an Acura TSX is difficult AF, it's a rare commodity.

·       There were only two in the Canadian used parts market with really high mileage. 

2)      Rebuild the damaged transmission.

 Transmission experts are like the surgeons, specialized and expensive.


 ·         Rebuilds are more reliable than a used transmission swap.

·        An honest transmission expert will be able to tell you what needs to be replaced.


 ·       It costs a lot of money to have it done right. Key word here is “right.” You get what you pay for.


Visit JAP, you won’t regret it.

Japan Auto Parts is a quality auto service shop in Toronto that specializes in transmission repair.

I stumbled upon them and spoke to the owner, Bruce Wulfsohn. These guys are legit, there is a reason for their 4.8/5 stars across 75 reviews on Google. You can check out my full review on the experience here.  Bruce was honest in that I actually didn’t need a full rebuild. I needed a new housing which he sourced used and saved me a few hundred dollars (thanks man!). He said that the only damaged gear that needed replacement was 6th gear. By the time it was all said and done I spent ~$2,000 to fix the tranmission. You know a shop is legit when you offer to pay them cash and they explicitly state that I would still need to pay the taxes, so I paid credit to earn some cash back rewards!

Why not just get into a newer car?

I get it, it’s 2016. I’m driving a car from 2006 that came out when I was in grade 11. I’m young, single, debt free and rent free (insert parents basement joke here). Yes, I could upgrade to something newer and nicer but it doesn’t make sense to me to leverage my savings for a new car. If we’re talking about an asset that will appreciate and bring in positive cash flow like an investment property then it’s a no brainer.

I purchased my first car after graduating college in 2011. It set me back $18.5K (all in). I paid $500/month over 24 months until I sold it for $13.5K before moving to Manhattan in 2013. At the time I still had a balance of $6.5K remaining on the loan. It hit me, my car depreciated $5K over the two years I owned it and here I was still making payments to pay off an $18.5K loan for an asset that is only worth $13.5K. Talk about a cash flow drain. 

I grew up like a lot of young men, a self-proclaimed automotive enthusiast. As I got into my working career it was clear that my car was a major expense that I needed to hedge while getting the most value and personal fulfillment. I do enjoy cars more than the average person so I want to drive something that is fun, sporty, comfortable and stylish that is well within my financial means.

I decided that for my next vehicle purchase I would need to have the full amount saved in cash and budgeted to spend up to $10K all in on the road.

Total Cost of Ownership.

What I didn’t understand in my teens was the concept of total cost of car ownership. Buying a car is the easiest and most affordable part, it’s the never-ending upkeep that is truly the biggest emotional and bank draining toll. Even when following your regular proactive maintenance schedule, shit happens and something seems to always go wrong.

If you own a car and can’t afford the standard maintenance and repairs using OEM parts that comes with the brand you are probably stretching beyond your means. Don’t buy a BMW M6 if you can’t afford the ~$20K it costs to replace the transmission should it fail and your warranty is expired.

There is a fine line between looking cool and being a financial fool.

Repair or sell.

I purchased the Acura TSX December of 2014 for $9.5K in cash.  As of the date of my unexpected repairs, there were only sixteen (16) 2006 TSX’s for sale on Auto trader in Canada, 3 of which were manual with an average sales price of $8.9K. So why would I make a repair that’s about 1/3 of the value of a 10 years old car?

My thought process.

·       The repair is less than 50% of the market value of the car (~$9K) and it's paid off in full. 

·       The heavy depreciation has already occurred and plan on keeping it another 4 years.

·       I’d end up paying at least $20K to get something newer that I personally enjoyed (3YO).

·       I am debt free and have the majority of my savings invested. Not the ideal time to liquidate.

·       Buying another used car is a gamble, it could require more repairs than my current one.

·       I have the cash on hand to pay for the repairs and while maintaining my lifestyle.

After much deliberation I said screw it and spent the money to get the repairs done. 

I buy used, how about you?

In my opinion, you get the most value buying a used car that is 2-3 years old. 

·      Someone else has already paid for the large chunk of the depreciation (up to 20%).

·       You can find something that has low mileage.

·       Equipped with current technology.

·       Balance of factory warranty which would cover anything major for a few years.

Plus most people who own their cars tend to take better care of it vs. the ones who lease them. I know someone who leases a nice BMW 5 series but puts in 87 octane when it recommends 91 and has no problem sleeping when he hears the engine knocking. You know who you are, squid.

I’m clearly an advocate in favour of buying used for many reasons but if you have the money to buy new and are OK with losing up to 20% after the first year then go for it. If you own a business or have the cash and don’t want to worry about anything and have nothing at the end of the lease term, then leasing is not bad either. It comes down to your personal preference, perceived values and financial war chest.

Budget for the unexpected.

My car is my main tool that enables me to go to work, have a social life, visit my family and just be with my thoughts when I need to escape for a cruise. The value is not in the physical car but where the wheels can take me to be with the people I care for and generate an income that surpasses its annoying variable cost.

You’ll always pay more than you expect, deal with it.

When you own a car, especially a used car, be sure to set aside an emergency fund each month to account for the unexpected. Lyfe happens. Be prepared to deal with it even if it means spending a few thousand dollars.

Drive a ride that’s right for YOUR lifestyle and doesn’t bleed your bank account dry.

Why I Broke Up With Him On Valentines Day

Why I Broke Up With Him On Valentines Day

Be Yourself. No One Else Will Do It For You.

Be Yourself. No One Else Will Do It For You.