Jilly, I know exactly what you mean about this question of, "What do you do?" I also find it too personal, and often manipulative as if people are trying to pigeonhole and dismiss me. Also I can tell by someone's tone and facial expression if what they're really asking is,
"Oh, I'm sincerely interested in you, and if we discuss what we put our lives into, it is a great way to find common ground," or
"I'm challenging you to see which category you fit into and where you rank versus me in terms of power, importance, and money."
I've worked a lot of different day jobs for paychecks, but I've always been artistically inclined, so I used to tell people I was an artist. The nice ones would start asking questions like, "What medium do you work in?" and the nosy types would ask, "How does that pay?" and "What galleries are you showing in?" In a way, the question was very useful to reveal people's natures up front and allow me to see who I'd like to avoid and who I'd like to be friends with.
Like you, I've had people dog me with that "what do you do" question, really digging to find out my standard of living. I say I'm an artist and they immediately want to know if I'm married and, if so, what my husband does for a living! Talk about obnoxious!
What you could do is have a basic business card made up (do a Google search on business card services -- several will do a sample run of several hundred for you for free, no strings attached) that says, "Jilly...Freelance Writer...[your website URL]." Then when people ask that dreaded question, just say, "I'm a freelance writer. What do you do?"
Most will talk about their own profession and you can relax and maybe enjoy hearing the interesting details about their job. But if they give you a three-sentence pitch and then turn the question back on you with, "What do you write," you can always fend them off by handing them a business card, saying, "It's all on my website. Sorry, there's really not much else to say -- I sit and I write," and then ask them another question about their jobs. That should get them off your back. The URL on your business card could point to your BellaOnline Frugal Living site or whatever other website you want.
Joy, I LOVE the question, "What do you THINK I do?" I once had someone say they thought I was a librarian. I was fine with that.