The most effective place for insulation is on the warm side of a wall.
Putting the insulation on the cold side, means you are paying to heat the frame and the spaces between the sticks. (and this means tons of wood, soaking up your heat)
An inch or two of closed cell insulation like polystyrene will make a very big difference to how warm and cosy you feel.
Putting the insulation on the inside means you can work at night, it won't matter if it rains or snows. Best of all you have room to move and you can stop and start whenever.
The insulation you have at the moment is almost useless, being open cell the air and heat pass right through it - the only time it works well, is when its placed in an airtight bag.