The Creative Investor - Real Estate Investor Debt Income Ratio

I have been trying to get myself into a better Debt/Income Ratio for a long time. I have been looking into paying off some of my loans and those off my wife's. Since I started investing into real estate, my debt/income Ratio has been getting higher and higher. Of course once it is over 40%, lenders have nothing to do with me. So, as a personal goal, I have been trying to figure out the best possible way of becoming debt free. After all, that is how we all want to be. Right??

I was talking to a friend of mine that is in RE as well. He suggested paying off some of my loans that don't have an appreciating asset. For instance, my wife and I still owe on one of our cars. The running balance is around $4000. But because we bought the car new, we are paying a really low interest rate on it. The question that I have to resolve is whether I should borrow money from an equity line to pay it off. But who in their right mind would go up from a 5% interest rate to a 8%. Would it be better for me to:

pay off my car with a second mortgage
pay off my car with an equity line
pay off with cash out of savings