Being a self-employed writer is not a lifestyle that suits everyone. In fact, there are a lot of misconceptions about what the job entails. I've been doing it full-time for over six years now, so while I can't claim an encyclopedic knowledge I can at least give you a brain dump of my personal perspective on it.
Firstly, forget the romance of the writer's lifestyle and the aesthetic beauty of having a Vocation that calls you to create High Art and lends you total creative control. That's all guff. Any depiction of the way novelists live and work that you see in the popular media is wrong. It's romanticized clap-trap. Here's the skinny:
You are a self-employed business-person. Occasionally you may be half of a partnership — I know a few husband-and-wife teams — but in general novelists are solitary creatures. You work in a service industry where output is proportional to hours spent working per person, and where it is very difficult to subcontract work out to hirelings unless you are rich, famous, and have had thirty years of seniority in which to build up a loyal customer base. So you eat or starve on the basis of your ability to put your bum in a chair and write. BIC or die, that's the first rule. Lifestyle issues come a distant second.
You are a supplier servicing one or two (rarely more) large organizations. You tender for work and if they like your pitch they will cough up an advance payment against the deliverables. Often you will discover in the contractual small-print that if you don't hand over the deliverables on time and to specification that advance, which you are using to pay your bills, becomes repayable in full. NB: if you don't think you can do the job, you shouldn't take the money. Publishers are usually reasonable about hitches on the production side, especially if you give them lots of advance warning and you're usually reliable, but they don't have to be. And if you piss off your large customer, they can drop you. It's a small field, and folks talk to each other. Get dropped by two or more publishers in a row, and people will start muttering.
Being a prima donna or a drama queen is not a survival asset. (Being personable, businesslike, and friendly ... well, that's another matter.)
You are almost certainly badly paid. A typical first novel in the SF or Fantasy fields nets an advance of just $5000 in the US market. By the time you've been around the bush a few times, if your career's doing well, you may be getting $15,000 to $20,000. And if your sales are good and you push foreign sub-rights you may double that figure, over the next two or three years. But you can't do long-term financial planning on the assumption that your advances will increase or your books will be big in Japan. As often as not your career will stagnate due to circumstances outside your control, and you may find your advances spiraling down. The Society of Authors figure I heard from around 2000 was that the average novelist in the UK earns £4,500 a year. Which is even worse when you remember that this "average" is skewed upwards by the presence of Terry Pratchett and J. K. Rowling.
(You shouldn't despair just yet, though. There are a lot of folks who write as a part-time occupation, maybe turning in a novel every 2-3 years while holding down a day job. They tend to drag the average down a bit, but they're not starving because they have other fish to fry. But writing novels is no easy path to fame and fortune, and if you want to earn lots of money, you should have gone into accountancy or medicine.)
Your lifestyle consists of this: sooner or later (usually later) you wake up, do your usual morning pre-work routine, then commute three metres to your office, wherein you sit for several hours, on your own, hoping the phone won't ring because it will break your concentration for a quarter of an hour afterwards, if you're lucky.
Somewhere in those several hours you will hopefully write something. Unless you're already an A-list writer who can pull advances in excess of $50,000, you'd better either pump out an average of 1000 finished (polished, edited) words of prose per working day, or go looking for a day job. There are roughly 250 working days in a year (I'm assuming you take a couple of days a week off, and have vacations and sick leave), so that's 250,000 words, which is about two ordinary-length novels and a couple of short stories. Some writers do a whole lot more than 1000 finished words per day; some do fewer. If you do fewer and you're at the low-to-middling end of the pecking order, you will not be able to earn a living at this career. Many writers do 250,000 words a year and still can't make a living. They may have part-time jobs, to make ends meet, or a full-time job and do the writing thing in the evenings and at weekends. It's a treadmill.
In addition to writing you will:
pore over copy-edited manuscripts, correcting editorial mark-upswritegrovel over galley proofs, looking for typoswritekeep track of your expenses and petty cash and do all the 1001 things that any small business person has to do to keep HM Revenue and Customs off your backwriteenthusiastically deal with the press and interviewers, no matter how small or obscure the outlet — publicity is always a priority unless you're big enough to hire a PR managerwritedeal with correspondence to your editor(s) and agent in a prompt, professional manner because if you ever get yourself a reputation for being difficult to work with you are so screwed ... (luckily editors and agents know that only lunatics and eccentrics want to be full-time writers, so no small amount of their time is dedicated to insulating you from the demands of other publishing folks, and vice versa)writepersuade your bank to accept cheques drawn on currencies they've never heard ofwritelearn more than you ever wanted to know about international double taxation treaties and the associated exemption formswriteanswer your fan mail (if you're lucky enough to have fans)did I say "write" often enough? I meant "write, even when you're sick to the back teeth of it, when the current project is an interminable drag, when you can't even remember why you ever agreed to write this bloody stupid book, when your hands ache from RSI and your cat's forgotten who you are and your spouse is filing for divorce on grounds of neglect".
And that's just for starters.
The most useful piece of sanity-preservation advice I ever received on the subject came from another writer (not sure who, but I think it may have been Mary Gentle) who, years ago, explained to me that if you work full-time as an author for any length of time, you learn to maintain your social life first and schedule your work life around it.
This may initially sound as if it contradicts what I was saying earlier about BIC, but bear this in mind: we humans are social animals. The novelist works on his or her own, closeted in a cell somewhere, with as little human contact as they can get away with while they're working. It follows that eventually you need to do the human contact thing. And you will receive a nasty shock if you insist on writing in the evenings and at weekends: when you surface to socialize, most of your friends will be unavailable. They all have day jobs, and they have limited free time. If your social hours don't overlap with their free time, you just aren't going to see them. So, despite being free to work whenever you want, this is a fairly strong argument for the jobbing author who values their sanity to keep evenings and weekends free. Never mind the author who has small children underfoot and has to deal with the exigencies of schools, childcare facilities, and the hundred and one other institutions that seem to assume parents are on call from 6am to 9pm.
So what are the advantages?
Well, if you're successful, people will want to see you and talk to you. People who've read your books. Sometimes they'll stop you to shake your hand while you're out in public. Often readers assume that they know you because they've read your work, so their body language and approach is unconsciously familiar, as if they've already met you. This can be really disconcerting, not to say embarrassing, if you've got a poor memory for faces and names (like me): is this person a complete stranger, or a long-lost friend?
If you can keep the writing going and make enough money to eat out once in a while, you suddenly find you've got a wonderful bonus that nobody with a day job has — you can take time off whenever you like! Eventually the novelty wears off (there's nothing like fetching up with jet lag in a strange airport an hour after the last shuttle into town has left to take the shine off foreign travel) but if you've got a yen to visit strange places you can indulge it. (Hell, if you write about them you can even make it a tax-deductible business expense — at least to the extent your accountant or common sense says that you can justify it in the face of an audit.) If you're an SF/F writer, you may find that fans who run conventions want to fly you in and wine you and dine you for the sake of your company. On the other hand, if (like me) you can't work while traveling, this can put a bit of a crimp on your globe-trotting.
What you won't get: book signing tours, stretch limos, and champagne receptions. Not unless your book advances are way bigger than mine: those things cost your publisher serious marketing money, and they're not going to spend that on you unless you're doing really well.
If you think I'm being a bit downbeat here, consider what a signing tour entails: you, the author, need to hit at least two bookshops a day — preferably more — and probably two cities a day, typically for five to ten days. This involves significant transport expenses, not to mention five to ten nights in different hotels, living out of a suitcase. Your publisher has probably put someone on managing your tour full-time, so that's two people's accomodation and travel expenses that they have to cough up. That's got to be costing them somewhere north of US $5000 for a 10-day tour (probably double that, easily) so your presence on the tour needs to boost your net sales by something over $15,000 to make it a break-even proposition. If you're signing standard hardbacks, odds are that you're going to be signing your name more than 150 times per day to hit that target. And while you're doing that, you're not actually writing your next book, which will hopefully make them even more money. No, seriously: signing tours don't make sense and won't happen to you unless you make the big-time. Ditto the champagne receptions. Every year or so, when you visit your publisher, your editor will (if you're lucky) take you out for lunch or dinner on the expense account, but that's living large.
So, to summarize: it's badly paid, the hours are weird, the office environment can be claustrophobic, you can't get the staff, you're selling your wares to big corporations who can roll over in their sleep and crush you if you don't make nice, nobody's going to give you a champagne reception, a stretch limo or a signing tour, there's lots of business admin stuff to deal with, and you still have to cram in a normal social life or you'll go mad.
On the other hand: you're doing exactly what you always wanted to do (or you'd get frustrated and go do something else). And what could be better than that?