How does that work with Time Machine? I once considered doing that, but I was worried that Time Machine would gobble the entire drive.
So Time Machine is pretty space-efficient, but it will keep growing over time until it fills the entire backup drive since there is no limit on how old the backups it keeps can be[1]. I guess when it starts filling up I will just manually delete some old backups to free up space if I need it. Apparently, another alternative is to limit the size (set quota) of Time Machine's backup volume in Disk Utility.
[1] Personally I wish this could be configured. I don't really care much about keeping old files, I just want to make sure I have a recent backup just in case my MacBook gets lost or stolen or it's SSD fails...