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This was our best experience of a 5 day trip to Iceland in December. If you want a free alternative to the Blue Lagoon, this is what I would recommend. The walk from the car park is up hill and can be difficult without nano spikes or crampons due to the ice. Views on the way to the hot springs are fantastic. Once at the river there are small wooden privacy fences, almost like a beach changing area to get changed. The river is very hot at the top and gets colder as it flows down. The temperature is perfect. We visited when it was -12°C and the river did a great job of warming us up. The walk takes 45-60 min from the car park to the river so take plenty of water and some snacks. Don't forget to bring a towel!
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