In a medium pot, put the sugar and turn the heat on medium. Make sure you do not stir or touch it at all. Keep an eye on it and be patient until you see the sides melting and the sugar start to become a light golden brown, keep watching it and make sure it doesn't burn. You can pick up the pot and swirl the caramel to melt the rest of the sugar, but DO NOT use anything to stir it.
Once you get a medium brown color remove it from the heat, add the heavy cream slowly and carefully, it will bubble vigorously so do not get too close to it.
Add in the butter and the vanilla extract stir with a wooden spoon until all the butter has melted.