Do the "Reformed" truly understand Grace?

I've been struggling a lot lately with some personal issues. Things I feel I never quite "conquer." And then, tonight I was sitting on my cousin's front porch as she blew smoke into my face and she told me she was finally going to quit smoking, a habit she has been going to quit for 10 years now. My cousin has lived a life that, quite frankly, I would be ashamed of. And yet, while she will admit that she was wrong, shame never seems to enter the picture. That's what caused me to wonder if we truly understand Grace. Most of my friends from high school and college who have some past indiscretion they are struggling to overcome seem to be in the same place as my cousin. Admittedly, there are things in my life where I feel I am in that place too. There is no shame for what I have done. My cousin is always telling me how God's grace is so important. How she is glad that we have a gracious God who forgives all our sin. But, she is continuously falling back into the same sin, over and over. This is a hard thing, because while I think that we will always struggle with sin, and often we will continuously struggle with the same sin, I think the general idea is that we overcome it. Not that we aren't tempted by it, but that we remember the past and we resist temptation - through God's grace. This is where I think shame actually becomes important. If I feel no shame over a past sin, then what is going to motivate me to remember God's grace and resist temptation the next time? Since we live in a society, especially among believers, where the maxim "It's better to ask forgiveness than permission" runs rampant, we simply decide that we can go on continuing to fail because God is gracious and he forgives us. You know the verses in Romans where Paul says, "Should I keep on sinning? By no means." In my mind that has always meant that I'm not going to go out and do something ridiculously, irrationally sinful just because God will forgive me. But I think I'm deciding that it is more appropriately directed at the idea that I do not continue to commit the same sin, but that since I have been forgiven I resist temptation through God's grace.
Now, I'm done with the soapbox. Honestly I needed to get some thoughts down and, since they are all a muddle, I could use some help making sense of them.