As for me and my house: it depends on what one means by "merit." I empathize with those who want to banish "merit" (both the concept and the vocabulary)--I used to be in that camp, too.
But Lee Irons was one who helped me think through the issues more carefully. For a fuller, technical treatment, see his essay, Redefining Merit: An Examination of Medieval Presuppositions in Covenant Theology, in Creator, Redeemer, Consummator: A Festschrift for Meredith G. Kline, ed. Howard Griffith and John R. Muether (Greenville, SC: Reformed Academic Press/Reformed Theological Seminary, 2000), pp. 253-269.
But I would also recommend a recent blog series that Irons did on merit. (It's seven parts; scroll down then work your way up.) It's a thoughtful presentation, and I think it has a great deal of merit (if you'll pardon the bad pun).
Irons also shows the practical implications. Here he gets to the heart of why merit is important for gospel-driven sanctification:
The merit of Christ necessarily and ineluctibly results in progressive sanctification. Anyone who claims to have the right and title to eternal life, but lives as if they are on the way to death, has an empty profession, a hollow claim. If you have the right and title to eternal life, then you are obligated to live as one who is on the highway to eternal life, and to show even now — in the midst of your mortal existence in a non-glorified, sin-tempted body, in the midst of your failures and partial obedience — the marks of one who is heaven-bound. And you show this best, not by perfectly avoiding sin (which is impossible while you are in this mortal flesh), but by fighting against your sin.As they say, read the whole thing.
The heaven-winning merit of Christ is mightier than your sin. By faith, lay hold of that reality. By faith, even when you have blown it big time, lay hold of the truth that heaven has been won for you by Christ, and since heaven has been won, you have not only the legal right to heaven but a foretaste of heaven itself already living in side of you, which foretaste is called the Spirit, so that by that Spirit you are empowered to fight against your sins and strive for greater obedience and service to Christ. . . .
The merit of Christ is the powerful spearhead of the attack that has broken into the devil’s kingdom and rescued you from Satan’s grip, transferring you into the kingdom of God’s dear Son. The merit of Christ is the shield of faith with which you are able to quench all the flaming arrows of the evil one. The merit of Christ will prevail, and nothing in heaven or hell can stop it from having its full, divinely-intended, predestinated effect.
Take courage, then, from the merit of Christ, and boldly fight against your sins. In the strength of the merit of Christ, put to death your sinful deeds and desires. Bolstered by the confidence of a merit that has won heaven for you, you can courageously take up your cross, risk everything, and follow Christ. You can spend and be spent for his glory and his kingdom, failing and sinning and repenting and getting back on your feet, and so wending your faltering pilgrim-way to glory steadied by the confidence that your way to heaven has been paved by one mightier than you. Your besetting sins are no match for Christ and his merit.