The strategic use of sinking funds always comes up during the FPU budgeting lessons. The best tool I have found personally for this is a crazy bank called Smarty Pig. Yup that's what it's called and had I not first read about it in Money Magazine I doubt I'd have put my money in it. Christy and I have been using this for a number of years now and LOVE IT.
It is an FDIC insured bank that has a cool front end interface like a envelope sinking fund. We use it for all the non-monthly expenses associated with our household budget. Property Taxes, Insurances (home, auto, and life) We pay annually but budget monthly using smarty pig and in many cases receive an annual "paid in full" discount for doing so. I love talking sinking funds and strategies and would love to hear from you on what works for your budget.
Dave Smith is part of the KCC finance staff and a Dave Ramsey Certified Coach.