How about using plywood and a miter saw to make the cutouts.
If you can find a fruit shop that has polystyrene broccoli boxes or any type of vegetable that are packed into polystyrene boxes. All it will cost you is to ask if they have any and if so could you have them??? They are normaly happy to give them out, so get as many as you can and start cutting them up and packing them into the wall. Good luck
The cheapest way to change insulation is to buy a new but 2nd or 3rd hand insulation get your friends with you and do the work together.
In my smoke shed I simply grabbed my old nail gun and put plastic over any cracks in the walls or below the windows, got an 18$ space heater, and hung up blankets. Good as new. Good Luck