Cut 3/8-inch plywood strips with the circular saw to extend the window and door frames. Add the thickness of your new siding to the 2 inches of additional insulation, and cut the strips of plywood wide enough to extend the window and door frames to the same depth as the siding. Nail the plywood strips to the existing window frames.
Mount the insulation sheets temporarily to the house with screws into the frame below. Leave the heads of the screws sticking out about 1/2 inch to make removing them easier. These screws hold the sheets in place until you can secure them with wood strapping.
Wrap the sheets of foam along the bottom edge of the house with window screen extending 6 inches up each side. This helps protect the foam from damage by insects, which may crawl up from the ground to sample the foam.
Attach a piece of 1-by-4 lumber across the top and bottom of each piece of insulation. Install the screws through the insulation into the wood framing below. Besides holding the insulation in place, the 1-by-4 creates an air space between insulation and siding that helps reduce moisture buildup. Remove the screws that held the insulation in place temporarily, and use these to attach the strapping for other sheets of insulation.
Cover each seam with weatherstripping tape. Smooth the tape down tight.
Caulk with silicone sealant the house corners and the places where the insulation meets window and door frames. Lay a thin bead of sealant with a caulking gun and smooth it out with your thumb.