Install insulation and drywall. Drywall and insulation create a barrier; prohibiting air from seeping out of a balloon frame home.
Eliminate surface leaks. Plug all wall holes with caulk. The main reason for heat loss in a balloon frame home is air escaping through the walls and shooting directly upward into the attic. Caulking prevents direct air leakages from main rooms into the area between interior and exterior walls.
Install a firewall. Hire a professional to complete the process. Firewalls are 2-inch wide intumescent strips encased in aluminum foil. They block air cavities between interior and exterior walls. Air or fire that seeps through walls remains trapped in place, unable to escape upward.