In a medium size pot, add all of the ingredients EXCEPT the vanilla and bring to boil over medium high heat.
Reduce heat to medium/low and continue to boil for 10 minutes. Mixture should be slightly thickened and pass the spoon test (dip your spoon into the mixture and swipe your finger across the back of the spoon, and if the mixture stays separate, it is done. If it runs together, it is not done).
Remove from heat and add in the vanilla.
Pour Caramel into a glass jar and cool to room temperature. The Caramel should continue to thicken.
Store in the refrigerator.