Interesting topic and discussion!
After moving my larger-than-I-realized unbuilt kit collection a few years ago, I switched my hobby-budget focus. I stopped buying new kits (mostly, anyway) and instead started putting that money toward tools and supplies -- things I could use to build the kits I already had at home, or ones that I'd build for the magazine.
It was a great move. I haven't invested big money in anything (no lathes or milling machines) but I have a great selection of files, picks, and hobby knives, a Panavise, a punch-and-die set, a couple of magnifiers, motor tools and bits, and not surprisingly, new tool organizers. Nothing spectacular, just plenty of good, basic tools.
I know a lot of a model's success or failure is related to the skill of its builder, but there really is something to be said for having exactly the right tool for the job at hand. If I need to remove a seam from a tight spot, I have a selection of riffler files that will take care of things quickly and easily. I find that with a better selection of tools to choose from, I enjoy model building a lot more, and I'm able to build a whole lot faster. And I always appreciate the fact that once I invest in a good tool, it'll always be there, ready for use.
Matthew Usher @ FSM