I think your inventory space is limited but you can spend upgrade points to increase it and when you get further into the game there's a storage box. Anyway, what's stopping you from doing it right in front of a vendor and sell him all your stuff right after you're done.
Cool thanks, I won't be buying this game right now because my to Buy list is already full for November, but I will take note of this glitch, it could make playing the harder levels much easier, thanks to whoever found this