Should I Use a Sinking Fund?

A sinking fund can be used to pay for home repairs, save for a new car, pay for your vacation, or cover large medical bills. By setting the money aside before you use it, you will avoid using your emergency fund unnecessarily. ... When it comes to personal finances, a sinking fund is a great financial safety net.

Is sinking fund useful to you?

A sinking fund is a fund containing money set aside or saved to pay off a debt or bond. A company that issues debt will need to pay that debt off in the future, and the sinking fund helps to soften the hardship of a large outlay of revenue.

Is a sinking fund bad?

(You can learn more about callable bonds here.) There is good side and bad side to a sinking fund for bondholders: The good side is that a sinking fund reduces the chance that a municipality will not able to meet their debt obligations, by enforcing fiscal discipline over the term of bond.