Measure out the cereal and set aside (it should equal one standard size box).
Microwave the chocolate chips, peanut butter, and butter for 30 second intervals until it's melted. Give it a good stir and add the vanilla and peppermint extract and stir again.
Pour the chocolatey mixture onto the cereal and toss gently until it's coated. Add in the sprinkles and stir so they're nicely coating the cereal.
Add the cereal to a large ZipLoc bag along with the sugar, and toss until it's coated. You may want to do this in two batches to make it easier (I did it in one batch and you can see some of the cereal is more coated than other pieces).
Spread the muddy buddies out on a lined baking sheet until it sets (you can pop it in the fridge if you wish). Store in a sealed bag or container in a cool place for up to a week or so. Note: It's normal that some of the sprinkles will come off. I just add them all to the storage bag/container and then sprinkle them over top when serving.