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I highly recommend using symlinks to synchronize dotfiles with a locally cloned repo. That way, you can make changes to the dotfiles sitting in your home directory and it'll be reflected in your repo should you want to commit those changes.

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I just track ~/ directly and add appropriate .gitignore entries to those files which are ephemeral or not part of my local configuration:

https://github.com/uggedal/dotfiles/blob/master/.gitignore

Wait, I've done it the other way around. I have a repo directory, and I created symlinks in ~/ pointing to the dotfiles in the repo. I have a simple install script to symlink the files.

Would you suggest having the physical files in ~/ and adding their symlinks to a repo?

I would think he meant what you said.... symlinks in the repo doesn't sound a good idea.

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