He then asked if I was willing to shoot someone over my xbox.
I told him, "The xbox was besides the point. We are talking about a person intruding into my house at night with my family present. Hell yes, I'd shoot him. It's the principle of the thing. I'd shoot a hole in my xbox without blinking to do it."
Damn, I got into a nice argument with my Aussie friend over this exact thing. He made a similar argument asking if I heard a bump in the night, if I would take my gun and kill someone in cold blood.
My response was similar to what OP said as well. It's not about my material possessions, its about the safety of my family and myself. If some motherfucker breaks into my home, I have to assume they are here to do harm. In am well justified in ending another man's life if he endangers mine or my family's.