“...baptism...How do we know?”
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It is quite simple really. The answer is the grammatical-historical method of interpretation.
If you read it saying that salvation is a free gift for anyone who believes in Jesus Christ and take that to mean just what it says, then you will believe exactly the same thing that all the others believe who also believe what it says.
“Believe in the Lord Jesus Christ and thou shalt be saved.”
However if you redefine any of the key terms, you can make a new religion. Teach, for example, that the word “believe” means to do the necessary good works, it only remains to have some way of declaring which works amount to believing, and one other small thing, to have some way to explain away all those pesky “not by works” verses like Titus 3:5-7.
Beware! If you just believe that book, then you will be catigated as a “fundamentalist”, a term which presumes that there are in fact foundational doctrines to Christianity and that people who do not believe those doctrines, including salvation by grace, are not Christian.
I am answering your question as if it were sincere, which if you will permit me to be honest, I seriously doubt. I do not know you and in my culture I am expected to give you the benefit of the doubt in these things. In my 52 years of ministry, this being asked in what I thought was genuine curiosity has been quite rare. Just like “Where did Cain get his wife?” some people seem to think it is a “gotcha question” or that is what they want it to be.
The folks here on FR are the dearest and best and yet even here there are some who will twist one’s words. This you well know. How is it hard to think that people do not do the same with the Word of God? Do you really want to know the Bible? Is there no living God Who can show you what He means in His Book? If your question is sincere, then you ought to have asked God directly. If you have asked Him and gotten nothing but silence, then you need to get to the bottom of that. Nothing is more important.
I have to say that yours is the best explanation I have heard, but I am still a little confused...
Looking at your answer, you say that salvation is a free gift that requires only belief and not works.
This sounds like the evidence some Protestants put forth that baptism is not necessary—is that what you propose?
And others who say that we must be born again of water, so is baptism a work and therefore unnecessary? Or is baptism necessary?
And there are those who say mere belief is not sufficient, for even the demons believe and tremble.
Thus there remain those who examine the Bible sincerely and come to different conclusions.
(If you bring up the issue of works because of the belief common among Protestants that Catholics believe that we are saved by works, Catholicism teaches that faith without works is dead, not that we are saved by works, (lest we boast). Just a little clarification.)