01 - In a medium saucepan, bring water, milk, and salt to a gentle simmer over medium heat.
02 - Gradually whisk in the grits, stirring constantly to prevent lumps from forming.
03 - Reduce heat to low and continue cooking, stirring frequently, until the mixture thickens and the grits are tender, about 20–25 minutes.
04 - Stir in butter and cream cheese until fully melted and incorporated into the grits.
05 - Remove from heat and fold in shredded cheddar cheese until smooth and creamy.
06 - Season with black pepper and cayenne (if using), adjusting salt to taste. Serve immediately, garnished with extra cheese or chopped chives if desired.