fcp7 working off hardrive?

looking for some help with disk space....
i recently bought a MBP with 120GB flash storage and have been saving all of my fcp 7 work onto an external hard drive...
i am having trouble with my project render files as they end up being saved onto my laptop HD, and i dont have much room...i usually clean up my laptop, but recently havent been able to work due to "insufficient disk space" however i have 15Gb free...
im wondering if you know of a way to completely work off of an external ? ie. saving render files etc. how to change settings etc.

any fixes to the above?

different note...
i have just purchased a GH4 and 4K looks like it will be a doosy to work with on FCP 7. any alternatives? never really enjoyed FCPX. hence why i time traveled back into FCP7.

Greetings:

What I always got into the habit of doing with FCP7 was creating a folder on my HD and saving everything to that folder. Project file, render files, capture, etc.

Choose Final Cut Pro > System Settings, then click the Scratch Disks tab. Click set for the top option, and the bottom three, and set them to the folder on your external drive. Create your new project and save it to this same folder. Now it's all in one place on the external drive. Abbreviated instructions, but I think you get the general idea.

Gotta' say though, I was one of the last holdouts on FCPX. Once I switched, there was never any turning back...