Christmastime finds Sarah and Bailey hosting a tree-trimming party, and Charlie "recharging" -- at his doctor's advice -- by accompanying Kirsten on a long-distance trip. The holidays also bring homecomings for Will, who discovers that he and Bailey live in two different worlds; and Justin, whose rosy tales of Ivy League life prompt Julia to paint a rosy picture of her own.

Unable to function, Charlie asks for help at home and at the restaurant. Bailey successfully manages the restaurant, but finds he has to fire Julia because of her poor performance as a waitress. Julia, meanwhile, is not having an easier time running the household, or Claudia, who finally discovers that Reed does not share her feelings of love. Charlie, who is having trouble just eating and sleeping, rediscovers his love for design through Sarah's project for theater class.

Julia and Griffin's relationship takes a turn for the worse when she dumps more of the household duties onto him and his money problems deepen. Bailey and Annie, tired of trying to hid from Natalie, decided to tell Natalie the truth about their relationship. Natalie doesn't take it so well. Claudia continues to deceive herself into believing that Reed is her boyfriend until he is brutally honest with her. Charlie decides to try out alternative medicine when he gets a persistent rash.

Julia bonds with a woman named Jeanie at her new temp job over their troubled marriages, but is disheartened when Jeanie ends up leaving her husband. Charlie embraces a new attitude, inspired by a new friendship with an adventuresome fellow patient. Bailey tries desperately to bond with Annie's daughter.

Charlie finds himself hospitalized after coming down with a bad case of pneumonia. Although he recovers, he decides it's time to write a will. Kirsten's husband Paul become jealous when Kirsten cancels their vacation and spends all her time visiting Charlie. Bailey realizes that he can no longer juggle school, the restaurant, the apartment building, and visiting Charlie in the hospital, so he decides to give up school. Claudia completely stops going to school, but also avoids visiting Charlie in the hospital. Griffin ends up having to sell the shop to and take a job from the man who ran him out of business.

Claudia continues to skip class until her guidance counselor calls a family meeting. When the only member of the family who shows up is Claudia, her school calls Child Services, who places Claudia and Owen with Kirsten until they can determine whether the elder Salingers are really capable of taking care of them. Griffin drifts farther and farther away from Julia as she has less and less time for him. Rosalie makes a move on Griffin which he rebuffs. Charlie wants to give Claudia and Owen to Kirsten in his will, but her husband doesn't want kids, and Julia talks Charlie into giving them to her and Griffin after she convices Child Services that they are the solid parental couple.

Bailey discovers Annie's relapse on the anniversary of her sobriety; and Julia rediscovers the academic world in a college literature class, while Griffin discovers he can no longer fight his growing attraction to Rosalie. Meanwhile, Claudia gets help from a psychologist.