In another bowl use a mixer to combine the butter and sugar on medium speed. Then add in the eggs, oil, red food coloring, vanilla extract, and vinegar.
While the cake layers cool, make the cream cheese frosting by mixing together the cream cheese, butter, powdered sugar, and vanilla extract until smooth.
To assemble the cake, level the tops of each cake and place one of the layers on a cake stand. Top with part of the frosting, and smooth it out into one even layer.