Wow, that's a framebuilder fail!

The half-round file is a bit risky, danger of filing into the threads if you tip the file at all. A little tipping is inevitable, no one's perfect. I always tip at least 15%

Maybe protect the threads with a bit of tubing? A "half pipe" of tube maybe 1-1/4" in diameter could be placed on the threads on both sides of where you're filing. One way to get free pieces of tubing is saw out a hunk of head tube or down tube from a dumpster frame. If you're lucky enough to have a dumpster with bike frames near you. Stock up when you get a chance... Shade-tree mechanics should try to keep at least one dumpster frame on hand to cannibalize for tubing, dropouts or other frame parts.

EDIT: I see vintage cellar beat me to the following, and OP says he doesns't want to spend $$, but I wrote it so here it is anyway:

The fastest tool for that job is a die-grinder with a carbide burr ("rotary file"). A die-grinder is basically Dremel's big brother, designed to take larger tools, but you can also get a carbide burr for a Dremel if that's all you have available. Typical shank size on a Dremel is 1/8", versus the 1/4" shank typical on a die grinder. I see used die grinders on my local Craigslist under $50 and there's even a new one on ebay for $41 (&free shipping), maybe not the best quality!

The most useful burr is the shape usually called "flame", like this:

That goes through Cr-Mo steel like a hot knife thru buttah. Note, the chips it makes are tiny ultra-sharp needles. Good eye protection is a must. Get the needles off your skin before they stab you. Sweep them up and don't track them through the house. Your housemates and pets will thank you.

The half-round file is far cheaper and safer though, and also a supremely useful tool. Just a lot slower, and doesn't get into small/awkward places as well.