Ok, so I don't really care whether or not I can afford an Audi (someone less responsible with their money could argue that I could have afforded one a long time ago, but for now I truly love my Corolla). While thinking about the topic of keeping expenses at manageable levels, I was reminded of an interaction I had with a former client a few years ago.
This particular client came to me to get help sending some money to a car dealership. When I noticed that the car dealership was an Audi dealer down the street, I said something like "looks like you're buying an Audi, they make very nice cars". I will never forget his response. In complete seriousness, he said "I wish I could afford an Audi!" before explaining that he was buying a used Honda that the dealer had taken in as a trade-in.
Here's the crazy part. This guy had about $2.5 million in his investment accounts, with a net worth over $3 million and was in his late 40s. He could have written a check for 10 brand new Audi's but opted for a vehicle costing far less than what most people would say he could have afforded.
I'm not advocating that we all should deprive ourselves of all luxury items, and it is possible that this particular individual was overly cautious, but it is critical that we think about how our money decisions affect our other financial goals. It is possible that he couldn't afford an Audi if buying one interfered with a more important goal, like retiring early, or caring for elderly parents.
For some people, driving a nice vehicle is more important than it is to others, you just need to understand that every purchase has a trade-off, and in a world of limited resources, it is unlikely that you can purchase a new car every year AND retire early AND have a vacation home AND travel the world AND put your kids through college AND have all the latest gadgets AND…do you get my point? Pick what is MOST important to you and make sure that nothing less important gets in the way. If you are married, this should be a joint decision where each of your individual preferences are considered to find your ideal priorities.