I have my dotfiles in a directory called ~/dotfiles in my home directory that is the repository. I move my files there, and remove the dot. Then I have a script to symlink them out. But etckeeper works differently...
With etckeeper, you would initialize the repo inside /etc, not a sub directory. This should be fine, but it creates complications because your gitignore needs to be a whitelist instead of a blacklist.
The first thing that you should do, is create /etc/.gitignore. Etckeeper does this automatically, with some defaults, but you want a whitelist, not a blacklist, so add a single * in the file. This should prevent etckeeper from doing git add for all your files.