Bob George has a wonderful illustration of this in his book, Classic Christianity.
Being made into a new creation is like a caterpillar becoming a butterfly. Originally an earthbound crawling creature, a caterpillar weaves a cocoon and is totally immersed in it. Then a marvelous process takes place, called metamorphosis. Finally a totally new creature - a butterfly - emerges. Once ground-bound, the butterfly can now soar above the earth. It now can view life from the sky downward. In the same way, as a new creature in Christ you must begin to see yourself as God sees you.
If you were to see a butterfly, it would never occur to you to say, "Hey, everybody! Come look at this good-looking converted worm!" And it was "converted." No, now it is a new creature, and you don't think of it in terms of what it was. You see it as it is now - a butterfly.
In exactly the same way, God sees you as His new creature in Christ. Although you might not always act like a good butterfly - you might land on things you shouldn't, or forget you are a butterfly and crawl around with our old worm buddies - the truth of the matter is, you are never going to be a worm again!
This is why the usual New Testament word for a person in Christ is "saint," meaning "holy one." Paul for example, in nearly all his letters addressed them to the "saints." Yet all the time I hear Christians referring to themselves as "just an old sinner saved by grace." No! That's like calling a butterfly a converted worm. We were sinners and we were saved by grace, but the Word of God calls us saints from the moment we become identified with Christ.
Some people ask, "But I still commit sins. Doesn't that make me a sinner?
I answer, "It depends on whether your identity is determined by your behavior what you do or by who you are in God's eyes." Do you see how we have continued to do as Christians what the world does by determining a person's identity based on his behavior? The only way to get free of this is to do what Paul wrote in Colossians 3:1-3:
'Since, then, you have been raised with Christ, set your hearts on things above, where Christ is seated at the right hand of God. Set your minds on things above, not on earthly things. For you died, and your life is now hidden with Christ in God.'
Butterfly photo by Tim Knight