The ego creates a false sense of separateness from the divine. The ego is formed by past conditioning (or karma) that is accumulated over countless prior incarnations. The spiritual journey is the process of dissolving the karma that forms the ego.
Most people identify with the ego to such an extent that they mistake it for who they are. They are unaware of their true, deeper identity–the soul that is always one with the divine.
According to Meher Baba, there are three planes of creation: mental, energetic, and physical. Once a seeker learns to perceive the energetic plane they begin the spiritual journey. As past conditioning dissolves the ego weakens, and a seeker progresses along the seven stages to liberation. When all karma is dissolved the ego is destroyed and a person attains liberation.