I had no idea I would eventually need more space for upgrades.
Your drive has 128 GB of total space (not memory) which, by today's standards, is quite small. So, you need to be conservative in deciding what to keep and what to throw away. Your backup drive is nice and large, but has nothing to do with the space on your internal drive. Your drive is what makes your computer run: it reads/writes every time you do anything at all, so it always needs some empty space for it to perform properly. You should always maintain a minimum of 5 - 10 GB of empty space at all times. So, before you want to download anything, take a look at how much space you have available and either move some space hogging files to an external or delete things you no longer need.