I did the free route for a long time without any problems. My approach was two pronged. I used Avast! free for anti-virus, and Malwarbytes, anti-malware free for general anti-malware protection. Worked like a charm, and the two packages are compatible together, and perform different tasks.
Yes free AV software is fine to use and many people go that route. MSE, AVG, and Avast are all recommended free AV software. Do not have two AV programs actively running on your system. They will conflict with each other and cause problems. You can however use one active one while using a second AV program for strictly scans like malwarebytes.