I have a 2006 wrx wagon that I bought about a year ago, I am debating if I should get coilovers or if I should bag the car. And yes I know bags are expensive. I did my research and I have about 6,500 saved up. I just need some advice for which option would be the best for my car.

I would consider two things, your driving style and the roads you spend most of your time on. Bagged will give you a more forgiving  ride day to day and will be fine for occasional track use, it will also give you the easy ride height adjustment if the roads you are on tend more towards the rural and you don't want to lose your front bumper but have a lowered car for smoother surfaces.

Coilovers do give a firmer ride and todays offerings are not as harsh and crashy as older ones - however buy cheap and you will suffer with build and ride quality. So less money than bags, less flexibility but better to get the car dialled in for handling