Why all the fuss about sin and guilt?

Because the guilty are guilty, and God is a God of mercy. These two realities must be juxtaposed to provide a Godly balance to our lives. Without understanding both, we run the risk of two extremes.
Ignoring the guilt of sin sets us on a dangerous track. We’ll begin to re-define our sins and continue to suffer the consequences of our guilt. Things will begin to grip our lives in unexpected ways. We’ll try everything in our ability, but nothing will provide relief or an answer.
On the other hand, when God’s mercy is ignored, we’ll get into a judgmental and legalistic mode. This is equally destructive as ignoring guilt. Once we’re on a judgmental track, God is no longer part of the equation. Our works become the primary valuation for our lives. Thus we forget reality. The reality that says we are guilty and God is merciful.
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