Assets: $847,000
Cash: $37,300
RRSP: $2,200
TFSA: $200
Pension plans: $794,900
Vehicles: $12,400
Liabilities: $3,700
Credit card A: $100 (2% cashback on all purchases)
Credit card B: $3,600 (3% cashback on groceries and 0% balance transfer)
Credit card C: $0 (3% cashback on restaurants)
Line of credit: $0 (3.7% interest rate)
Debt ratio: 9.9%
I calculate the debt ratio against the assets that are associated with it. In this case, I wouldn’t cash out a pension plan or RRSP to pay off these debts. This month’s liabilities are in the form of credit card debt; therefore the debt ratio is in relation to the available cash.