Robert decides to cancel the Christmas holiday because he is disgusted with his children's greedy behavior. On Christmas Eve, all of the children have the same strange dream where they are visited by elves, which look a lot like Wendell and Robert. The elves make each of the kids realize how terrible they've been acting. The next morning Robert has a change of heart and decides to celebrate Christmas as usual. However the kids decide to celebrate Christmas a different way by giving all of their presents to needy children.

Zaria runs for class president against Bradley, a popular senior who stoops to use dirty politics by spreading false rumors about her. Furious, Zaria discovers that Bradley has a drug problem and was about to enter the school's counseling program before it was cancelled. Her moral dilemma is whether to sling the mud back at Bradley.

Robert begins to appreciate life more when an old acquaintance of his passes away. He plans a picnic for the family, and when the bad weather keeps them from going outdoors, they wind up delivering the baby of Wendell's pregnant passenger.

Michael auditions female singers for his band, and the front-runner is Zaria's annoying friend Theresa.

Michael thinks he might be able to clear up his songwriter's block by smoking some marijuana that he received from a jazz trumpeter. Meanwhile, Nicholas gets upset when Arnie and his other friends taunt Nicholas because he's not good at sports.

Upset when her parents refuse to front her the cash for a pair of expensive running shoes, Zaria takes a second job at a clothing store where she discovers the wonderful world of buying on credit. Olympic gold medallist Gail Devers plays herself.

Against their better judgment, Robert and Jerri allow daughter Zaria to wear a revealing dress to a dance, where the teen finds that her ""hoochie-mama get-up"" may be sending the wrong message and attracting the wrong type of guy. Meanwhile, Wendell continues to court Karen. When he learns that she wants a man who likes children, he sets out to prove it by taking her and the Petersons' younger children to a fancy restaurant. Chaos results when the children let lobsters loose.

Nicholas has been having a ball playing on a losing basketball team. But when Robert takes over as coach, the fun is done even when the wins come. Meanwhile, Michael and his friend Theresa are confused about their feelings for each other after they unexpectedly share a few kisses.