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.A sinking fund call is a provision that allows a bond issuer to buy back its outstanding bonds before their maturity date at a pre-set price. A sinking fund is a savings method that will help you accomplish your financial goals. Explore what a sinking fund is and how to use one. The sinking fund allows you to save money to replace the majority of your home if your home is damaged due to fire or water. Sinking funds are earnings earmarked for a specific purpose: paying off a bond or debt. Explore sinking funds in accounting in more depth, right here. A sinking fund can be used as a budgeting tool to help you save for specific future expenses that you know are coming. If at all possible, pay extra on the debts, concentrate on the lowest debt first.