Encrypted Linux Operating System on a USB stick for normal humans
Computers are actually pretty simple. Once you understand a few funtamental truths.
Firstly Don't Panic
Dwarfs standing on the shoulders of giants (Latin: nanos gigantum humeris insidentes) is a Western metaphor with a contemporary interpretation meaning "one who discovers by building on previous discoveries".
Create a Linux LiveUSB. You can boot it off almost any computer lying around and then rather than installing it to the computer you just booted it on, you can install it to a SECOND USB stick.
This will then let you create a USB stick that is persistent (your files are stored on there like a 'normal' computer) and encrypted (doesn't matter if you lose it because you've got your directory syncronised via S3/Dropbox/SpiderOak right?).
There are so many links online to dodgy documentation that I should add my own but the exact details change so quickly that you're better off asking for advice in IRC. Try http://webchat.freenode.net/ and channel #linux
Don't forget to play.