Chunky Potato Soup

Chunky Potato Soup
3 medium potatoes
2 cups water
1 small onion
2 Tbsp butter
3 Tbsp flour
crushed red pepper flakes
pepper
3 cups milk
1/2 tsp sugar
1 cup shredded cheddar cheese
1 cup cooked cubed ham
Peel potatoes and cut into 1 " cubes. Bring water to a boil and cook potatoes until tender. Drain, reserving 1 cup water (add if needed) and set potatoes aside. Fry onions in butter in a saucepan until clear. Add flour and seasonings, cook for 3-4 minutes. Gradually add potato water, milk and sugar, stir well. Add cheese and ham. Simmer over low heat for 30 minutes, stir frequently.
*recipe came from Grandma's Kitchen recipe cards