Vodka. Vanilla beans.
Or dark rum. Vanilla beans.
That's it!
I started with a half cup of vodka in a mason jar, and added two scraped-out vanilla beans, in chunks. I screwed the lid on and shoved it in the back of a cupboard for three weeks. What came out was dark, vanilla-y, and light-years tastier than the store-bought stuff.
If you have a way to get vanilla beans fairly cheaply, this is a cost-effective (and tasty) way to make your own. But therein lies the rub--it's hard to find cheap vanilla beans. Chain grocery stores are known for charging $10 for 2. Your best bet would be to find an ethnic market; when I lived in Brooklyn, I bought mine at Sahadi's, 4 for $5. Whenever I'm in the area, I buy $20 worth, which lasts me a while.
They are pretty cheap on Amazon and there are a lot of varieties - I bought these ones before Christmas and made extract for all of my family. I gave my mom 10 or so beans to keep hers going, and I still have plenty. They do offer in smaller quantities, but the price per bean goes up a bit: http://amzn.to/htI1M5
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