Using a sharp knife, split each vanilla bean lengthwise. I usually keep one end attached to make it easier to pick them up.
15-20 whole vanilla beans
Place the sliced beans into a bottle of vodka (you might have to pour out a little of the vodka to fit them all). Seal the bottle tightly.
750 ml (25 .)oz vodka
Place the bottle in a cool, dark place and let it steep for at least three months, preferably longer. Shake occasionally, whenever you remember to do it.
After resting for several months, your extract will be a deep golden brown colour and smell strongly of vanilla. It's now ready to use in any baking or cooking as you would use store-bought vanilla extract.
Once the extract is finished steeping, simply transfer to another clean bottle, or bottles, for storage. It will keep for years. Top up the beans in the original bottle with more vodka and start again. Rotating between the two bottles like this should keep you in enough vanilla.
Notes
Use more beans: if you want the vanilla to be a darker colour, you can add more beans to the bottle, about double. I don't find that this really alters the flavour, only the colour, so I stick to about 15.
Reuse those beans: I keep the same vanilla beans for ages, simply adding more vodka once it runs out. Every few months I'll add a new bean or two to the mix, and refresh the beans entirely every couple of years.