Late to the party here, but I figured I would jump in.
I am in the middle of options 2/3. I sold the car that my parents bought me for college ('08 WRX - $15,500) and paid the M3 off with my summer earnings/savings from co-op jobs. While all of my friends blew their load in college, I invested and made a decent chunk of change. For some reason, this prompted me to make a horribly irresponsible choice to purchase my M. Like many others, though, it was always my dream car, and it has been and will be worth it forever.