1. Preheat your oven to 350°F (175°C). Lightly grease a 9×13-inch baking dish with butter or non-stick spray.
2. Cut the bread into cubes, ensuring you have 4 cups worth. If the bread isn’t stale, toast the cubes on a baking sheet in the oven for 8-10 minutes to dry them out.
3. In a medium saucepan, heat 2 cups of milk and 1/4 cup of unsalted butter over medium heat until the butter melts. Remove from heat and set aside to cool slightly.
4. In a large bowl, whisk together 2 large lightly beaten eggs, 1/2 cup granulated sugar, 1 tablespoon vanilla extract, and 1/2 teaspoon ground nutmeg. Gradually add the milk mixture while whisking to combine it without cooking the eggs.
5. Place the bread cubes into the greased baking dish. Sprinkle 1/2 cup of raisins evenly over the bread if desired.
6. Pour the prepared custard mixture over the bread and raisins, ensuring all the bread is evenly coated. Gently press down with a spoon to help the bread soak up the liquid.
7. Allow the mixture to sit for 20-30 minutes so the bread absorbs the custard completely.
8. Cover the baking dish with aluminum foil and bake for 30 minutes. Remove the foil and bake for an additional 10-20 minutes, or until the top is golden brown and the center is set (a knife inserted into the center should come out clean).
9. While the bread pudding bakes, prepare the vanilla sauce. In a medium saucepan, melt 1/2 cup of butter over medium heat. Add 1/2 cup granulated sugar, 1/2 cup packed brown sugar, and 1/2 cup heavy cream. Stir constantly until the mixture thickens and begins to bubble.
10. Remove the vanilla sauce from heat and stir in 1 tablespoon of vanilla extract. Allow the sauce to cool slightly, as it will thicken more as it cools.
11. Once the bread pudding is baked, remove it from the oven and let it cool for about 10 minutes.
12. Serve the bread pudding warm, drizzled generously with vanilla sauce. Add a scoop of vanilla ice cream or whipped cream for an extra indulgent touch if desired.