Phungwayo was released by Orlando Pirates at the end of last season after spending five years with the club following his arrival from Bidvest Wits at the beginning of 2012/13.
During his time at Bucs, the 29-year-old struggled for fitness and to dislodge Thabo Matlaba on the left side of defence.
After his departure from Mayfair, Phungwayo was tipped to reunite with former coach Eric Tinkler at SuperSport United but no deal materialised.
"Of course there were clubs but I wanted to play more and most teams had already done their pre-season with their players," Phungwayo says.
"I then looked at Free State Stars and the opportunity to play was there and that is why I came here.
"But so far I'm not yet happy obviously but of course it is all about game time - and it is why I came to the team, to add value."
Phungwayo hopes Luc Eymael's side can build on their 3-2 win at Polokwane City last week. It was their first victory of the season.
"The coach has done everything so far and it is just up to us to convert our chances and obviously close the back door and that is up to us.
"But the aim is the top eight. There'll be the Nedbank Cup still to come and that is what we aiming for."
Eymael's charges next host SuperSport United at Goble Park on Wednesday.