Your financial situation is nobody's business. There's only two reasons to buy a car like an M3 and neither one of them are "sound financial decision", but we're not talking about houses or 401k's or stocks, we're talking about cars. Anything beyond a 15 year old beater Honda is technically a waste of money in that they both get you from point A to point B. Buy the car if you want to and you can. Simple as that.
My only advice would be to sell your GTI privately since you'll never get anywhere near what you put into it with the parts and everything. Better yet take the parts off and sell them separate, then sell your car privately. You're probably talking several thousand dollars there.