While you are free to adjust your privacy settings any way you want, a chain is only as strong as its weakest link. Any one of your "friends" can share any information that they can see. To think of it another way: consider whether the post you are about to make is something you would be okay with every one of your "friends" repeating out loud to one other person they know (as in "look what Justin just posted!"). Chances are somewhere in that chain is your mother, grandmother, ex, or even a potential employer.
Of course, doing this every time you post may make you wonder, why am I even on facebook if it's going to be this hard?
Well, maybe that's a good question to ask yourself:
Why are you on Facebook?
If you are on Facebook to connect with old friends, then you should think about whether what you are posting is ideal for that purpose.
If you are on Facebook to connect with potential employers, then obviously you may want to post a different caliber of information.
And if you are on Facebook to try and hook up with old lovers, then don't be surprised when it comes up at your divorce trial.
Goals and motivations are important in life and your virtual life should be an extension of your real life (not an escape). Live (and post) accordingly.