$10k DAC in a 3k system?

Can't agree more with fsmithjack, that the source first approach is the right one and with bigkidz. If you leave your source and upgrade downstream, it will sound different and maybe even "better", but the limit will always be the signal fed into the chain of equipment. I guess: It's possible that you like your current system because you can listen to it for long periods without getting tired. If so, then it is probably because it sounds natural to your ear - good musicality (described in more detail by bigkidz). In my experience it is very easy to mess this up when you upgrade downstream (cables of equipment) only as better downstream equipment may sound more impressive and revealing etc, etc, but it cannot improve the fundamental quality of the sound - the musicality - coming from the source. Only a better source can do this. As a matter of fact I found that even though a downstream upgrade sounds all that better at first, it leads to listeners' fatigue quite quickly. The example mentioned by larryi has been experienced over and over many times and has been reported on by many audiophiles around the world - this may be a hint in itself of where to look for the best upgrade path. Once a source of the right "level" (as can only be judged by yourself wrt money, musicality etc) is in place, the enjoyment will improve significantly. This should last for a long time. Then a cautious selection of the right downstream upgrades (as per almarg post) will yield improvement without degrading the musicality of the system. All this of course IMHO.

 The T + A DAC 8 DSD is incredible for $4k. If you can hear this DAC you will be amazed by it. I have a Chord Dave which I love but would totally be just as happy with the T+ A DAC for 6k less money. 

I have the dave dac and see it as sort of an end game dac. It is much better than my previous dac (ayre codex) and it will probably stay in your system for many years while you start upgrading the other components.  Also-just add a pair of top line headphones to the dave and you have a state of the art system for headphone listening while you save your other pennies.

There are shoes you can buy for $5k and $200 and wear them with same comfort and style.

I think Jond hit the nail on the head. DAC's are the fastest evolving - and the fastest depreciating audio equipment category. In my experience, you are going to want to buy used....and you will still lose money. Trickle down has made most lower priced DAC's sound decent such that on mid-fi systems most comparisons will be slight; one might sound a tad fuller. The best advice is to have a listen to several contenders (throw in a high priced DAC too). Still, in expensive systems, that tad of fullness translates into a huge soundstage and disappearing speakers that make a good DAC purchase rational. (P.S. How's that retirement fund coming along?)