For making homemade hot chocolate, heat the milk in a medium-sized saucepan. Once the milk is warm, add the chocolate, stirring until chocolate is melted and steaming hot (keep an eye on the mixture).
Add the ground cinnamon and vanilla extract; stir well. For a thick hot chocolate, continue to cook at a very low boil for 2 more minutes. Taste, and add sugar if desired. Serve immediately.