It depends where your priorities lie, but let me tell you as a previous owner of a used luxury car (2002 Mercedes E320), be prepared for a substantially bigger impact on your budget and FI goals than just that innocent 250 a month. You should also consider the hidden opportunity costs of repair/maintenance, premium fuel usage and low fuel efficiency, higher insurance premiums, and (when financing used vs. new) higher interest rates on used car loans.
With today's record low interest rates and incentives on new vehicles, you could be driving a brand new car with warranty for that same $250 a month.
That's what I'm doing. I recently purchased a new Honda Civic Hybrid with 10,000 from the Merc and some cash down (so I financed about 15,000). My payment is exactly 261 a month with 0.9% financing--the Merc loan was similar at 264 a month, but at 6.9%!
Insurance on the brand new car was $60 LESS per year than the nine year old Merc.
Gas costs have been cut in half, as I now get 50+ mpg on regular unleaded versus about 25 on premium gas. (especially important given my 70+ mile daily commute)
But the NUMBER ONE thing that swayed my decision was the warranty, and thus decrease in maintenance costs over time. Once you put up your first $350 or so to the mechanic for something stupid like a window regulator (as I did within three months of ownership), you'll understand the downside of an out-of-warranty German luxury car.
In my new car I will enjoy a 6 yr/100,000 mi warranty, so my expected maintenance and upkeep costs for that time? Hopefully, zip! Whereas I could foresee that Merc costing me $6000+ to maintain for the same timeframe! And I expect the Honda will offer reliability and cheaper repair costs even after warranty. I figure as long as I keep the vehicle for at least ten years, I can obtain enough value to make the purchase worthwhile.
On the other side of the coin, though, I have to say the Merc was my "dream car" also, when I purchased it. And man, it WAS pretty gratifying. For me I loved the car's appearance, thought it was the best looking thing on the market, and it definitely made me feel good to be in that car, I admit it! But to me, I've decided I value other things more than having a stylish/powerful car, and I'd rather have all the additional money it cost going somewhere else. Again, it depends on your priorities. If you really love driving, maybe the personal value you get from a luxury car is greater. To me driving is just getting point A to point B safely and efficiently.
Just some things I considered, maybe they'll help you.
