This is essentially what I've been doing for about a year and a half.

I've found that the best way to do it is to focus 100% on client projects for a month or two, and then take a month or two for yourself. IMHO "single-tasking" results in much better quality work.

While you're working on your own thing, you should be meeting with potential clients and setting up your next paying gig, since the sales cycle on a couple month project large enough is about a few weeks to a month anyways.