Combine sugar and water in saucepan over medium heat.

Bring to rolling boil, stirring to help dissolve the sugar.

Boil for 5 to 8 minutes, until it turns a golden brown.

Pour in the cream, whisking constantly. Be careful, as the caramel is hot and it will foam.

Once the cream is combined, remove from heat and whisk in the salt and vanilla.

The caramel will seem thin. It thickens alot as it cools.