Hi!
Need to update my theme, but not sure how to do this without messing up my site. Any guidance would be greatly appreciated. Thanks for your help!
(PS, happy to pay to have my theme files updated, and also so I can update to wordpress 3.5) Thanks again!
Create a new thread and tell me what problems you are encountering and what you want to know. 
There is no step 3 :) 
