Yes! Monthly is great. Dh and I just switched to a similiar method.
We have large manilla envelopes with the month written on the front: "JANUARY 2005" and at the end of the month, it gets clasped and put in a box with the rest. If I need something from that month it is very easy to find. As soon as a bill gets paid I write "Paid on X/X/2005, Ck. #1" And if only a portion got paid, I write how much. (Having the check number on the bil has helped so much the handful of times I needed to go and check about it. Rather than going back through all the records to find the right one, I just go to that bill. Good stuff.)
Honestly, this is the only thing that is working really well for me as far as taming paper. I open mail immediately and ditch the junk. I have a basket that used, but with one side still blank paper goes in so that we can use it for printing things that don't need to be on pristine paper.
Sometimes I feel desperate to find somewhere that recycles office paper like my college did. Haven't found it yet. Maybe I'll post for suggestions.