The process is pretty simple. (This presumes that your current moodle installation folder is called moodle.
Back everything up.
Download the new moodle code. Rename it moodlenew and move it to the same folder that your current moodle folder resides in.
Copy over all your additional plugin folders from your existing installation to the new moodle folder.
Copy config.php file from existing installation to new moodle folder.
Check permissions and ownership.
Then rename moodle to moodleold and moodlenew to moodle.
Open a web browser to your site and go through the upgrade process. All your settings etc stay the same.