The first post in this set on baptism by fire explored the experiences people have had in being baptized by fire. It is worth reading that first in order to more fully understand what the experience is.
Nicodemus was a Pharisee and a member of the Sanhedrin. He appears three times in the Gospel of John. He first visits Jesus one night to discuss his teachings. (John 3:1–21) The second time Nicodemus is mentioned, he reminds his colleagues in the Sanhedrin that the law requires that a person be heard before being judged. (John 7:50–51) Finally, Nicodemus appears after the Crucifixion to provide the customary embalming spices, and assists Joseph of Arimathea in preparing the body of Jesus for burial. (John 19:39–42)
1 There was a man of the Pharisees, named Nicodemus, a ruler of the Jews:2 The same came to Jesus by night, and said unto him, Rabbi, we know that thou art a teacher come from God: for no man can do these miracles that thou doest, except God be with him.3 Jesus answered and said unto him, Verily, verily, I say unto thee, Except a man be born again, he cannot see the kingdom of God.4 Nicodemus saith unto him, How can a man be born when he is old? can he enter the second time into his mother’s womb, and be born?5 Jesus answered, Verily, verily, I say unto thee, Except a man be born of water and of the Spirit, he cannot enter into the kingdom of God.6 That which is born of the flesh is flesh; and that which is born of the Spirit is spirit.7 Marvel not that I said unto thee, Ye must be born again.8 The wind bloweth where it listeth, and thou hearest the sound thereof, but canst not tell whence it cometh, and whither it goeth: so is every one that is born of the Spirit.9 Nicodemus answered and said unto him, How can these things be?10 Jesus answered and said unto him, Art thou a master of Israel, and knowest not these things?11 Verily, verily, I say unto thee, We speak that we do know, and testify that we have seen; and ye receive not our witness. (John 3:1-11)I love verse 8. The workings of the Spirit are a mystery, but we can feel of its effects on us, just like the wind. We can't control it, but we can experience it. Verses 9-11 are interesting. They imply that Nicodemus had not had this experience of being born again, although given his religious position, he should have had it.
Two things stand out to me as I read these verses:
(1) The Lord will ask us to do hard things to help us progress;
(2) Ordinances are invitations for interactions with God.
The Lord will ask us to do hard things
Why would being “born again” be a hard thing for Nicodemus? What would it entail in terms of his standing in the community and among the Sanhedrin? This reminds me of the time the rich young ruler came to Jesus asking what he needed to do in order to enter the Kingdom of God. Jesus told him to sell all his things and give it to the poor. He wasn't willing to make the sacrifice.
When you go to the Lord seeking light and truth, He will require something of you. This is absolutely necessary for your progression. It is part of the cycle of descent and ascent. You can't just ascend to higher truth. You have descend first, by giving up something (such as a sin or a weakness, etc). As you seek for light and truth, be prepared to be asked to sacrifice. It is a requirement for progression and exaltation. The opposite is damnation.
Ordinances are an invitation
What happened to Adam when he was baptized by water?
And thus he was baptized, and the Spirit of God descended upon him, and thus he was born of the Spirit, and became quickened in the inner man. And he heard a voice out of heaven, saying: Thou art baptized with fire, and with the Holy Ghost. This is the record of the Father, and the Son, from henceforth and forever; (Moses 6:65-66)Adam was baptized by water and by fire as was spoken about by Jesus in John 3:5. Baptism by water and baptism by fire are inseparable. Joseph Smith said this very thing:
You might as well baptize a bag of sand as a man, if not done in view of the remission of sins and getting of the Holy Ghost. Baptism by water is but half a baptism, and is good for nothing without the other half that is, the baptism of the Holy Ghost. (HC, 5:499)When Joseph Smith spoke of the baptism of the Holy Ghost, he was not referring to confirmation. It is a false belief that confirmation completes the baptism. Being confirmed and being baptized by fire are different events, although it is possible for them to occur simultaneously. So many people assume they have been baptized by fire simply because they have been confirmed. Rather, confirmation is just another invitation for the baptism by fire.
All ordinances are invitations for further interactions with the Lord. Think of the ordinances performed in the church (baptism by water, sacrament, initiatory, endowment, sealing, etc). None of these ordinances assure us of anything. Without the experience they invite us to have, they are worthless. In other words, without the baptism by fire, the baptism by water is incomplete. Without seeing Christ, an endowment doesn't mean what we think it means. We are required to obtain what they invite us to obtain.
What do the ordinances invite us to obtain?
Take a look at these ordinances. I have linked them with the experience they invite you to obtain:
Baptism by water – Baptism by fire
Sacrament – An endowment of the Spirit
Initiatory – Cleansed from the blood and sins of this generation; anointed to be kings/queens and priests/priestesses.
Endowment – To receive the Second Comforter and be brought back into the presence of the Lord
Sealing – To obtain the sealing power and have the ability to seal our families to ourselves
The ordinances without the interaction with God are incomplete and do not lead to the what you seek without the experiences that follow. We need to seek to have these further experiences if we are to be exalted.
Getting back to Nicodemus. The Lord was teaching and inviting him to be born again or experience the baptism by fire. Have you been baptized by fire? I think a lot of people think they have when in reality they have not yet had that experience.
How do I know if I have been baptized by fire (born again)?
 Our sins are forgiven
A word that is often used in the scriptures which means forgiveness of sins is justification. It simply means being declared blameless, free of guilt in the sight of the Lord. Another word that is often spoken in conjunction with justification is sanctification. What is the difference between justification and sanctification?
Justification: forgiveness of all our sins; being declared blameless
Sanctification: “after being sanctified by the Holy Ghost, high priests could not look upon sin without abhorrence” (Alma 13:12); no longer sin willingly
Nephi spoke about how a complete baptism is the gate to the path towards Christ. If we have not had the experience or we are not sure we have had the experience, we are not yet on the path (2 Nephi 31:17-18). Once we are on the path, staying on the path means living by every word which proceeds out of the mouth of God or following the Spirit (2 Nephi 31:19-20). This leads us to become sanctified because the Spirit will lead us to do those things that overcome our weaknesses. Sanctification then leads to being able to be in the presence of Jesus Christ in this life. It sounds simple, but it is a difficult and painful process, but well worth it.
Baptism by Fire / Justified → Live by the Spirit → Sanctification by the Spirit → Second Comforter
Have you had an experience where you have been told that all your sins have been forgiven you?
 Gifts of the Spirit are given
If you examine the scriptural accounts of those who have been baptized by fire, it is apparent that they spiritual gifts were manifest. For example, among the Nephites there were some who had been baptized by fire. They experienced various gifts of the spirit and miracles as a result of this experience.
And it came to pass that the thirty and first year did pass away, and there were but few who were converted unto the Lord; but as many as were converted did truly signify unto the people that they had been visited by the power and Spirit of God, which was in Jesus Christ, in whom they believed. And as many as had devils cast out from them, and were healed of their sicknesses and their infirmities, did truly manifest unto the people that they had been wrought upon by the Spirit of God, and had been healed; and they did show forth signs also and did do some miracles among the people. (3 Nephi 7:21-22)Orson Pratt said:
Now then, if I receive the gift of the Holy Ghost, or if my brethren receive it, I should expect that we would receive the manifestations of these gifts, one receiving one gift and another another, according to the Bible pattern. If we did not receive these gifts, then we might doubt that we had received the Holy Spirit. We are commanded in the Scriptures to try the spirits, for there are many spirits who are gone abroad into the world who are false spirits. Try them: by what rule? Try them by the written word, and see if we have the gifts as recorded in the New Testament. If we have them, we may be assured that the Holy Ghost has been given to us. For instance, if a person receives the baptism of fire and the Holy Ghost, and the heavens are opened to him he is not mistaken. If the Lord inspires him to lay hands upon a sick child or a sick person, and he commands the disease to be removed, he knows that God is with him, and that he hearkens to the supplications and prayers which he offers in the name of Jesus in behalf of the sick. If a person has the vision of his mind opened to behold the future and to know that which will shortly come to pass, and he sees these things fulfilled, from time to time, he has every reason to believe that he has really received the Holy Ghost. So in regard to speaking in tongues. If an illiterate, uneducated man, who never understood any language but his mother tongue, is inspired at the very moment to rise and testify in an unknown tongue and to proclaim the wonderful works of God, he knows whether his tongue has been used by a supernatural power, or whether it is merely gibberish out of his own heart. He knows it very well for himself; and so we might continue throughout all the gifts mentioned in the Bible. If he beholds angels, and they descend before him in their glory, and he hears the sound of their voices, beholds the light of their countenances and the glory that radiates from their personages, he knows for himself, consequently this constitutes him a witness as well as those who proclaimed this Gospel before him. (Journal of Discourses, Vol.16, p.216, Orson Pratt, September 28, 1873)So one way we know that we have been baptized by fire is if we possess spiritual gifts. Alma 9:21 states this too. Are we conversing with angels? Are we receiving revelations regularly?Are we hearing the voice of the Lord? Do we prophesy? And so on. And as we know from the New Testament (1 Corinthians 12), and The Doctrine and Covenants (section 46), and the Book of Mormon (Moroni 10), there are many gifts. These should be manifest in our lives. If you have been baptized by fire, think about what spiritual gifts you were given.
Too many people though assume that talents, such as an artistic or musical ability or an interpersonal ability (e.g. listening well), are spiritual gifts. That is not the case. Spiritual gifts are God-given abilities through an endowment of his power. You cannot possess that gift without faith in Christ and access to his power. The minute you willingly sin or lose faith in Christ, his power and spiritual gifts are gone. Think about how the gift of prophecy cannot be done using one's own abilities. This is the same with the gift of tongues, visions, healings, discernment, and so on.
 Change of Heart
With the baptism by fire, you become a "new creature," possessing a new heart (2 Corinthians 5:17; Mosiah 27:25-26). King Benjamin spoke of retaining the remission of your sins (Mosiah 4:11-12). Paul spoke about becoming dead to sin (Romans 6:1-12). This can only be done by living a different life to the one lived before. You no longer desire to live the same life as before (Mosiah 5:2).
 Immersion of the Spirit
Those who have been baptized by fire also experience a full immersion of the Spirit, as tangible as being immersed in water. See the first post on this topic to read more about this.