Certainly the word ‘grace’ is used to indicate the favor and blessing of God as in 1 Corinthians 1:3, “Grace to you and peace from God our Father and the Lord Jesus Christ.” But grace is also a faith-based covenant contrasted with a law-based covenant. For example, under law, sins were merely covered in spite of thousands of ritualistic killings of sheep, goats, bulls, and other animals whose blood couldn’t remove sins. Another important truth of law-based living is that when the people of God were obedient, they were blessed. But when they were disobedient, they were cursed as in Joshua 24:19-27 and elsewhere throughout the old covenant.
But Joshua said to the people, “You cannot serve the Lord, for He is a holy God. He is a jealous God; He will not forgive your transgressions nor your sins. If you forsake the Lord and serve foreign gods, then He will turn and do you harm and consume you, after He has done you good.” And the people said to Joshua, “No, but we will serve the Lord!” So Joshua said to the people, “You are witnesses against yourselves that you have chosen the Lord for yourselves, to serve Him.” And they said, “We are witnesses!” “Now therefore,” he said, “put away the foreign gods which are among you, and incline your heart to the Lord God of Israel.” And the people said to Joshua, “The Lord our God we will serve, and His voice we will obey!” So Joshua made a covenant with the people that day, and made for them a statute and an ordinance in Shechem. Then Joshua wrote these words in the Book of the Law of God. And he took a large stone, and set it up there under the oak that was by the sanctuary of the Lord. And Joshua said to all the people, “Behold, this stone shall be a witness to us, for it has heard all the words of the Lord which He spoke to us. It shall therefore be a witness to you, lest you deny your God.”
When Christ came, bringing truth and grace as well as grace for grace, “And the Word became flesh and dwelt among us, and we beheld His glory, the glory as of the only begotten of the Father, full of grace and truth. John bore witness of Him and cried out, saying, ‘This was He of whom I said, ‘He who comes after me is preferred before me, for He was before me.’’ And of His fullness we have all received, and grace for grace. For the law was given through Moses, but grace and truth came through Jesus Christ” (John 1:14-17). He lived under the law as manifested in the old covenant and the gospels, a portion of which are law-based. He became the final sacrifice for sin, and after He ascended, a covenant of grace was instituted. Now Christians no longer need to seek continuous forgiveness, because in Christ "we have forgiveness of sins" with no conditions attached.
Ephesians 1:7 declares, “In Him we have redemption through His blood, the forgiveness of sins, according to the riches of His grace.” This is echoed in Colossians 1:14, “…in whom we have redemption through His blood, the forgiveness of sins.”
Conditional forgiveness is a thing of the past. For example, if you don’t forgive, neither will your Father in heaven forgive you. “Should you not also have had compassion on your fellow servant, just as I had pity on you?’ And his master was angry, and delivered him to the torturers until he should pay all that was due to him. So My heavenly Father also will do to you if each of you, from his heart, does not forgive his brother his trespasses.” (Matt. 18:33-35). The Lord’s Prayer also addresses the topic of conditional forgiveness.
Finally, grace-based living changes how we think about ourselves because it changes God’s opinion of us. After the finished work of Christ, he calls us "the righteous"; whereas, he calls unbelievers the “unrighteous” followed by a list of nasty names, “Do you not know that the unrighteous will not inherit the kingdom of God? Do not be deceived. Neither fornicators, nor idolaters, nor adulterers, nor homosexuals, nor sodomites, nor thieves, nor covetous, nor drunkards, nor revilers, nor extortioners will inherit the kingdom of God. And such were some of you. But you were washed, but you were sanctified, but you were justified in the name of the Lord Jesus and by the Spirit of our God” (1 Cor. 6:9-11). Thus our identity is changed because it is no longer based on what we do as it is for those under law, but it is based on who we are "in Christ".
The unbeliever is a liar if he lies, a thief if he steals, a fornicator if he fornicates, and a sinner if he sins. The believer is called holy, accepted, without blemish, pure, perfect in Christ. We are not sinlessly perfect, but under grace we have been given the gift of perfection. "For if by the one man’s offense death reigned through the one, much more those who receive abundance of grace and of the gift of righteousness will reign in life through the One, Jesus Christ” (Rom. 5:17). This perfection is the righteousness of God Himself. Of course, in order to fully understand this concept, you need to think of yourself as being trichotomous: body, soul, and spirit. The dichotomous man, or the one who believes himself to be just body and soul as the ancients did, cannot even begin to fathom what this means!
My prayer is that God will reveal to you the truth of who you are, the truth of all that grace is.