Answer
When extravagance is being practiced, it is clearly noticeable. It is very obvious when a person is wasting money and is a spendthrift. If your need is just 3-4 pairs of dresses and you have your wardrobe full of dozens of clothes which you don’t even use on daily basis then it is extravagance. If your requirement can be met with only one or two lights and you have illuminated the whole house, then it is extravagance. One must keep overviewing all these things.
The principle here needs to be understood that a person has material as well as aesthetic needs. It is possible that a person belonging to a mediocre family can only afford to buy ordinary clothes but another one can afford to have branded clothes. If Allah SWT has given him enough and his financial status, work environment or social circle demands him to have branded clothes then it is not extravagance. Same way if someone can only afford to have a small car but the other one is blessed with enough wealth to afford a luxury vehicle then buying and keeping it is not extravagance. Instead of one luxury car, if the same person keeps four or five luxury cars then it is extravagance and expression of display of wealth or pride. One must stay away from pride and boasting wealth as well.
For a need or satisfaction of aesthetic sense if someone buys something, it is not considered as extravagance. If there is no need and someone keeps wasting money on buying and hoarding things, then that is a problem.