Please note that much of this is cribbed straight from Chris Wanstrath's config at http://github.com/defunkt/emacs, with pieces from Jim Weirich's configuration as well: http://github.com/jimweirich/emacs-setup/.
Clone this repo into ~/.emacs.d then:
cd ~/.emacs.d/
touch config/custom.el
git submodule init
git submodule update
Finally, create a file called ~/.emacs and place the following line in it:
(load "~/.emacs.d/init.el")
You can put local configurations in config/custom.el. Any passwords should go in ~/.emacs.d/.passwords. Both of these files are ignored by Git.