Place a medium saucepan over medium-high heat, add the sugar, and scrape from the edge of the pan to the center, continuing this clockwise around the whole pan until the sugar has melted and achieved an amber color. (view notes above for photos).
Once the sugar has melted and become a nice amber color, quickly remove it from the heat and add the water. The syrup will rapidly boil and immediately release plenty of steam, just back off until it calms down.
Once it has settled down, place it back on the heat at medium and add the vanilla paste or extract. Allow it to simmer and boil as you continue to stir for 3 minutes.
Take it off the heat, and allow it to cool for no less than 10 minutes before pouring it into a jar and storing it in the fridge. Now you can enjoy it in your coffee, tea, ice cream, and many other things!