I listened to what everyone said, reseached a variety of cars online, thought about what I would be ok with spending, and
here is how it turned out. On saturday, I went and saw the the perfect matrix. It had all the bells and whistles, everything I wanted, only 8000 miles, and drove perfectly. Sadly, I couldn't talk the dealer down into my price range. I really only felt comfortable with spending 12K on a vehicle, and had already decided to push my comfort zone to 13K for that particular matrix, since it was in such great condition and had all the bells and whistles. They were asking 14K, and only came down 200$.
It was honestly worth that amount, I just wasn't comfortable with spending that kind of money. Maybe in a couple of years I will be ready to do so, but I'm still getting financially settled, I just got out of debt and was looking forward to having some actual spending money for a bit. After spending the last 4 years saying no more than yes when it comes to buying things I want, or going out to nice restaurants or the movies, or traveling, I just couldn't bring my self to spend that much. Especially since after taxes, title, and all the other random fees they tack on, the car would have been over 15K.
So I settled for the cute little toyota echo. I checked the carfax report, and all indicators are that it was someone's commuter vehicle. It has 70K miles, and I'm paranoid, so I made the purchase conditional on a mechanic review and the dealer fixing anything that was identified as being problematic. The toyota dealership I took it to actually said that the vehicle was in great shape other than needing new back tires and 2 fairly minor maintenance repairs. The dealership is going to buy us 2 new tires and has said they'll fix the 2 issues identified (we'll see how this all works out in practice). I also got 1000$ for the dying honda, and talked them down on the price by 500$ since they advertised the car with cruise control, and it didn't actually have it. In the end, After trade in, taxes, etc are considered, I paid around 6000 out of pocket for a very nice car. If they do the recommended repairs for free like they said they would, then I'll be golden.
Since the echo's Kbb retail price was around 9500 (though with the minor repairs you could drop it to 8500) and I got it for 6500, I am especially pleased. Plus, its a cute little car. Really its only fault is that it isn't the matrix I so desire. And I think I can forgive it that.