Keep the dotfiles where-ever you want, I personally prefer keeping them in ~/dotfiles.
Then when you want to take them into use run ./bootstrap which will git pull the latest version from the repo and copy them into your $HOME dir.
git clone https://github.com/duxilio/dotfiles.git && cd dotfiles && ./bootstrap
./bootstrap
When you've customised the dotfiles or the boostrap file in particular you might want to check what would happen if you'd run ./bootstrap.
For this you can run the bootstrapper with the --test flag. This will copy the files to ./test/ instead of $HOME.