Remove pot from the heat and add in the sugar and vanilla extract. Let the milk cool until lukewarm (112 degrees).
Stir in the yogurt starter or yogurt, mixing well. Pour mixture into a quart jar.
Set the jar in a warm spot for about 7 hours, or overnight, to cultivate and set (time depends on desired firmness). Here are some ideas of how to keep the yogurt at the right temp: set in your oven with just the oven light on, set in a slow cooker (turned off) covered with a towel by a sunny window, or use a heating pad on low.
After the yogurt is set, place yogurt in refrigerator for at least 4 hours before eating. Serve with preserves, granola, or by itself.