First, so people know:
Lordship salvation is basically the idea that you are saved through faith in Christ AND good works. Now technically it does not require good works, and instead advocates for a changed life, and uses good works as a means of gauging whether a life has been changed.
Free grace salvation is basically the idea that salvation comes from faith alone.
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Now the problem is, they are both right to some extent, and at the same time, when taken alone they are both rather dangerous.
Free grace salvation is technically the correct view. Now the problem comes when people (usually non-Christians newly coming to faith) hear this and decide that they do not have to to anything but claim Jesus. It is the same problem that occurs with the OSAS doctrine.
Yes, the only thing that needs to be done for salvation is to TRULY and LOVINGLY accept Jesus Christ as Lord and Savior and do so in faith. The thing that is not told (because ti does not pertain to salvation, exactly) is that when you are saved you are filled with the Holy Spirit who guides you through your life from then on. (this is where the Lordship salvation idea becomes right) Evidence of a saved life IS a changed life. The problem with Lordship salvation is that it relies heavily on good works and quick changing.
First, my only comment on good works is that God sees good works as nothing greater than dirty rags (and those are not any dirty rags, but the dirty rags of the feminine hygiene type.)
Now Lordship salvation also assumes that these changes will happen quickly. This is not always true. We are each at a different place in our spiritual growth. Everyone is different and grows at a different rate. Some people are more tied up in sin and they will take longer to get themselves unraveled. Some people are more or less living a Christian life already, and their growth may come very rapidly.
I have only been a Christian for a matter of months. When I told someone this they were staggered because they said they figured I had been a Christian my entire life. My good friend is also a Christian and has been one for a year or so. He is still very weak in faith and love, but he is coming along. So you see, growth is relative.
Another example, when I was in 6th grade I was 5' 11". I have not grown a single inch in the last 6 years. We grow in spurts, not steadily and at a predictable pace.
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So you see, the correct view is really a hybrid between the two. A man IS saved through faith alone. However, if we do not start to see changes in our live we should be concerned, but of course we should not expect an over night metamorphosis into Billy Graham. Both of these views are right and wrong int heir respected areas.
My last comment, is that the free grave salvation is the most dangerous of them because it will lead many people into giving them what they think is salvation, but is really lies. It is through the free grace salvation idea that many evangelists come to "save" people, and it explains why people seem to be leaving the church in "droves". When in reality, they were just visiting the church, they never decided to sit around.