Is God outside of time? If so, how does this relate to His sovereignty and our free will? If not, please explain.
Yes, God exists outside of time because God existed before time. He inhabits eternity (Is 57:15), He is the I AM. In Exodus 3:2, the fire that Moses saw in the bush did not consume the bush. The fire was not dependent on the bush to exist. God was declaring to Moses that He was the self-existing God, who is not dependent on His creation to exist. By calling Himself the I AM, He declares that He is, He is self-existent.
God is also unchanging (Mal 3:6). Then God created time. He created the world in six, 24-hour days. He did not change when He created the earth, nor does His existence depend on His creation. But God is also not detached from time. God holds all of creation and all of history, directing it all to His predetermined end. Not a sparrow will fall to the ground without the will of your heavenly Father, and the very hairs of your head are numbered (Matt 10:29-30).
God is sovereign over His creation and governs all things by the council of His will. He has elected a people from before the foundation of the world. He determined when and how Christ was born, and when Christ will return at the end of the world.
God raised up Pharaoh to show His power and to declare His name in all the earth (Ex 9:14; Rom 9:17). It was all in God’s sovereign decree that Joseph was sold into slavery by his own brothers (Gen 50:20), that he ended up in prison, became the second ruler in Egypt, that the famine came, that Jacob and his sons moved to Egypt, that the Israelites were made slaves in Egypt, that Moses was born and miraculously spared alive, and was called to be God’s servant to lead Israel out of Egypt. God hardened Pharoah’s heart, showed His power in the plagues, delivered His people from slavery, and led them through the wilderness to the promised land. The nations all heard of the power of God, and it brought a fear upon them (Joshua 2:9-10).
God in His sovereignty also determines the means to the end. By our fall in Adam, we are unwilling and unable to obey God, but by grace, God also renews the heart to repent and believe. Then our will is also renewed, to will and to do of God’s good pleasure (Phil 2:13). God in His sovereignty decreed all things, but it was Pharaoh who did not want to obey God. It was the Jews that willingly crucified Christ (Acts 2:23). It is us who willingly reject God’s word when we disobey.
Then it is amazing to consider that God sovereignly made the way of salvation through Jesus Christ, that now the gospel comes to people who do not even want to hear it (Matt 22:3; 23:37). He calls you to willingly repent and believe, and also gives you a willing heart (Ezek. 36:26-27). God does not drag people kicking and screaming into heaven against their will, but makes them willing and gives them a desire to know God. But all those who are not willing to repent and believe will be cast away forever. No one will be able to blame God for their unwillingness to come to Him for salvation.
This shows us the open welcome of the gospel in Christ, and our utter dependance on the God who created us, who gives us life, breath, and all things (Acts 17:25). Now He calls out to you, “Whosoever will, let him take the water of life freely (Rev 22:17); and “if any man thirst, let him come unto Me [Christ] and drink (John 7:37).