This is still a stickler for me. I am told by those more in the Arminian camp is that God is pleased only with those who work righteousness,
This is true. And Jesus is the only one righteous. The only way God can be pleased with us is if we have Jesus' imputed righteousness, which is received through faith as a free gift of grace.
Where do grace and obedience meet?
I can't beat Beoga's answer.
they bring up the numerous scriptures warning us to watch out, that if God's wrath was poured out on such and such for sinning, how much more it will be poured out on us, how we are to watch out concerning falling away, etc.
We are supposed to watch out and be sure we do not fall away. Jesus said, "The one who endures to the end will be saved" (Matthew 24:13). If someone does not endure to the end, it doesn't mean God's promise to preserve his elect has failed, it means that person wasn't one of the elect. God will preserve his elect, but the saints must persevere or it's evidence they were never saved.
If someone is elect, God will regenerate them, and what it means to be regenerate is to be a new person, to be set free from the bondage of sin, to long after the things of God. That's why Jesus said, "Not everyone who says to me, 'Lord, Lord,' will enter the kingdom of heaven, but the one who does the will of my Father who is in heaven" (Matthew 7:21). It doesn't take a supernatural regeneration to say, "Jesus is Lord." The natural man can make a profession. But the natural man does not want to
live like Jesus is Lord. For that it takes a supernatural work of God.
The clearest example of Biblical saving faith to me is the thief who was crucified next to Jesus and was saved on that cross. He didn't do one thing to merit his salvation. He believed and then a few hours later he died. His salvation relied completely on the work of another. But he was regenerated. God created in him a new person, he died to his old self, and if he had been brought down off that cross and given another year of life, he would have
lived it.
So it is true when John says, "If we say we have fellowship with him while we walk in darkness, we lie and do not practice the truth" (1 John 1:6). But not because our walking in the light is what earns us the favor of God. Instead, it's because walking in the light
will happen if we have been regenerated by the work of the Holy Spirit. If we do not walk in the light, God has not made us new.
Saving faith isn't merely an intellectual understanding of the gospel. James said, "Even the demons believe—and shudder!" (James 2:19). The type of belief James is talking about here is not saving faith, but an intellectual understanding. They know Jesus is Lord, but they reject his lordship. Similarly, there are many people who say "Lord, Lord," but they don't put their trust in Jesus' promises and obey him, and they will not be saved. If you truly believed Jesus' promises, you would obey him. Jesus said, "If you love me, you will keep my commandments" (John 14:15).
It's really as simple as putting it in terms of any other person. For some reason when we're talking about believing Jesus we've allowed ourselves to think it only has to do with an intellectual understanding. But if I walked up to you and said, "I've got a really great investment deal for you, if you give me $5,000 and in five years I'll give you $5,000,000." And then you say, "I believe you," but don't sell your car gladly so you can pay me, you don't really believe me. So when Jesus says, "Do not lay up for yourselves treasures on earth ... but lay up for yourselves treasures in heaven, where neither moth nor rust destroys and where thieves do not break in and steal," (Matthew 6:19-20) and you don't live in such a way as to store up treasure for yourself in heaven instead of earth, you call him a liar.
The kingdom of heaven is like treasure hidden in a field, which a man found and covered up. Then in his joy he goes and sells all that he has and buys that field (Matthew 13:44).