Sure, it's possible. That's what I've been doing for the past 10 years. Keep my overhead as low as humanly possible (I have simple needs - basically a small Steam budget and a Netflix subscription), and do short contracts when money gets low-ish. And really, it doesn't usually even get that low.

I know everybody worries a lot about resume gaps. I don't know. YMMV. All I can say is it hasn't yet disqualified me from a job I wanted. If all you do is contracts, and all they want is a contractor... I mean... ? If I've been working on personal projects, which I often am, I put it on my resume and talk about it.

That's it. I've enjoyed living this way.