I'd rather spend $400-$500 on a knife than ammo, it will last much longer. Reality of it for me though is I do not collect knives or buy them to keep up with the jones clan or because it came out in a new steel. I buy knives because it's hard to gut a deer without one, pretty difficult to fish without one, darn hard to prep food without one, process wood for a fire without one, make a shelter or fishing spear without one. Even getting clean angled cuts on the lilac branches I cut this morning to freshen up the interior of the house would have been hard without a knife. I buy knives based on I need it to perform a task.
See, there's where I must do the balancing act; I too buy knives for their specific usefulness, but I already own all the "must haves" in terms of "tools for the trade"
I have kitchen knives, a fishing fillet knife, a couple short fixed and longer fixed, for hunting/camping/edc'ing, and I have more folders then I'll probably ever use; slip joints, liner locks, frame locks, lock backs, large and small (though most I own are in my prefered 3"-3.5" range), so any new knives I buy, are the really a necessity I ask myself? Not really... Maybe upgrading a current blade, but adding something I don't have (or "need" persay), but usually just collecting at this stage.
My guns on the flip side, much like a knife with a dull edge, a gun without ammo is pretty useless... I don't pop shots at the range like I used to, my military days getting further and further behind me (7 years now), but with a family of 4 and 20 some odd guns, I do like to always have rounds on hand for each of them so they never sit there as mere showpieces but are in fact useful tools in their own rite. (And for those times I do decide I want to hear one go bang, I always like to have rounds on hand).
Much like a dull blade on any particular knife, there isn't much worse (for me) to find I'm on my last box of ammo for any particular gun. I like to keep my blades sharp with honing so I don't have to "sharpen" them as often, and even when I do I can often go right to finer grits because they aren't that dull. Similarily I like to keep my ammo supply "sufficient" so I don't run out, and i like to restock when I still have what some would consider plenty, just like honing a blade that most would say is already sharp... Last thing I want in my guns or knives is fancy paperweights and expensive billy clubs...
So I do the balancing act... Which do I want more, the fancy knife (I want but don't need), or more rounds of ammo for any particular firearm (I want but dont necessarily need), and often times for me, ammo wins the debate in the pricier range... Just like you said you would rather buy a $300 knife then $300 worth of ammo because it will last longer, that's the same reason I often justify the ammo over the knife, because i figure the knives I already own will more then likely last longer then the ammo I already own. I will probably need that $300 case of bullets long before I need that $300 knife... When you think of a gun in terms of a knife, and the bullets being that edge, I like to keep my guns as sharp as I like to keep my knives.... But that's just me. To each his (or her) own.
I even saw Les Paul's for over a hundred grand!!!
