I know it's everyone's personal choice how to live and how to spend their money. However, I have always followed my late fathers advice - if you can't pay cash (with the exception of buying your home) then you can't afford it. For most one of the lower spec models is plenty good enough.
Your fathers advice was in general sound (though harder to apply to a car or house perhaps), however the $400 10 core upgrade does not automatically transform the iMac from affordable to not affordable.
Also, interest free loans call in to question the wisdom of paying cash. You could take that cash and earn some interest in a savings account (not much admittedly).