Well, it starts with accepting all that Scripture presents as from God and not setting any of them against themselves.
And what I find in the NT is two things:
1) the Scriptures you favor regarding being
declared sanctified/holy through faith in Christ,
2) as well as Scriptures that command
engagement in the
action of a
process of
sanctification/holiness.
From those differences, I understand two different things from the Scriptures that are going on regarding
sanctification/holiness.
There is an initial event called justification in which by faith God declares one "not guilty," in permanent right standing with his justice, righteous, sanctified (
set apart from sin and for him). That is 1) above.
And then there is a life-long on-going "event" that operates in the believer, a process through obedience in the Holy Spirit, whereby he grows and matures in this initial righteousness/sanctification declared of him at his justification. That is 2) above.
In addition to being
declared sanctified/holy in
justification,
the NT likewise teaches being
made sanctified/holy by the work of the Holy Spirit through obedience in the
lives of the justified.
They are not opposed to one another, the second is the fulfillment and completion of the first.
The first is a legal declaration permanently setting one on right
footing with God's justice, where there can be no claim made against one for sin.
The second is a
growth process whereby one is transformed into the image of Christ, becoming more and more like one's heavenly Father, who has commanded us to be holy,
because he is holy. (
1 Peter 1:16)
This growth process does not determine our salvation, that has already been determined and settled.
But it will determine our fellowship with God, our closeness to him, our peace and joy in the Spirit and of our salvation, our effectiveness in ministry and service, etc.
This growth process is the natural spiritual evolvement only of the born again.
And where it is not taking place, there is no assurance that there has actually been a new birth; i.e., that one is saved.
Hope this helps.