Are we saved by faith, or works, or a little of both? Is this just a matter of taking what Paul has said and combining it with what James seems to be saying?
No. We are not saved by what we do – we are saved by grace through faith. James AND Paul are emphasizing different things, but that doesn’t mean they believe different things. Paul says we will be judged by what we do (2 Cor 5:10) – very similar to what James is saying here – that having a mental belief is not enough – faith means trust, which is active and living. That faith brings us into a right relationship with Jesus Christ, through the Cross. He lives in us and empowers us to follow Him, draw close to Him, and have His peace, hope, and love.
So salvation is more than just having your sins “taken away” – it is God taking away the habit of sinning, and slowly changing the desire to sin – and turning that in to a desire to love Him and follow Him more and more. That is what it truly means to be saved from sin.