Tim Chester gives a good quick explanation of the teaching coming out of the Reformation that Christians are simultaneously sinners and justified.
I’m a sinner, but I’m a justified sinner. The Reformers had a Latin phrase to capture this truth: semper peccator, semper iustus: “always a sinner, always justified.” I still sin, but in Christ God declares me to be righteous here and now. So we needn’t and shouldn’t despair. If we think of ourselves only as failed sinners, then we may feel disqualified from Christian service and settle for a compromised life. You are a justified saint, equipped for battle, capable of adventurous, risky discipleship on the front line of God’s kingdom.
Sin is never the last word for the children of God. Grace is always the last word. If we confess our sins to God, he is faithful. He’ll keep his promise to forgive. (You Can Change, pgs. 176-177)
If we don’t understand that we still battle indwelling sin, we will pridefully undermine progressive sanctification falling prey to a form of perfectionism. This misunderstanding leads us to battle sin only externally instead of battling our sins at their root (our sinful desires and idolatry). In doing this we are infinitely reducing God’s holiness by creating sub-standards we can live up to in our own strength. By the way, if mere external righteousness was God’s desire for us, Jesus wouldn’t have had such harsh rebukes for the Pharisees.
If we don’t understand our justification and our new identity in Christ, we will give up in our pursuit of holiness due to despair. Here are two reasons understanding justification keeps us from throwing in the towel. First, understanding our justification gives us the security of resting in our forgiveness and acceptance in Christ. Therefore, when we sin we don’t run from God, but instead we run to God in repentance knowing we are accepted because of Christ. Second, understanding our new identity in Christ, we know that new life means a new way of living.
The reality of our indwelling sin keeps us humble.
The reality of our justification keeps us hopeful.