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How do you know you're saved or living in God's Grace?

Many years ago litmus paper was used to test the acidity or alkalinity of a solution. In interviewing potential hires for a job a question was asked of the candidate to determine whether it was worthwhile to proceed with further interviews. This was called a "litmus" test or acid test. Here John applies the principal to our faith. A sort of litmus test of salvation if you would. How do you know you're saved or living in God's Grace? Read below and take the litmus test.

3 And hereby we do know that we do know him, if we keep his commandments.
4 He that saith, I know him, and keepeth not his commandments, is a liar, and the truth is not in him.
5 But whoso keepeth his word, in him verily is the love of God perfected: hereby know we that we are in him.
6 He that saith he abideth in him ought himself also so to walk, even as he walked. 1 John 2:3-6 (KJV)

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