It's the first day of school for Lilly and Karen starts college. Carol is bored so she decides to go to college and enrols in the same classes as Karen, to her embarrassment. Dana dumps Rich over his lackadaisical attitude to school.
A movie company is coming to Port Washington and all the Lambert girls try out for a role in the movie. However, only one can get the part. Carol is baking cookies for Lilly's class's bake sale, when it suddenly becomes competitive.
Frank and Carol are going through a bedroom drought and, no matter what they do, they keep getting interrupted. Rich acts mysteriously and Karen is convinced he is cheating on Dana. Karen and Al follow him to find out what he is doing.
JT is having trouble keeping a job when he pressures Sam into getting a position for him at her garage. As payment for a patio job he did, Frank accepts a boat in lieu. Carol is not happy when she sees the piece of junk that it is.
Karen flirts with a new teaching assistant and Dana believes it is the reason why Karen is getting better grades than her. Mark starts dating an out-of-control punk girl, and Frank and Carol believe that she is leading him astray.
Karen is trying to get into the Delta Theta Zeta sorority and is going to their pledge dinner. Dana is also invited. Frank's business is very slow when they hear that an old friend of Carol's is about to start building a big hotel.
It's Halloween and the kids are all ready for a party, which they have in old neighbouring house. JT and Sam are having relationship troubles and break up. Meanwhile, Lilly is having her first Halloween party in the Lambert house.
An old friend of Rich's, who is a girl, returns to Port Washington. Dana becomes concerned and a little jealous when Rich seems to have a lot more fun with her. Frank's cousin is passing through town and calls in, to Frank's chagrin.
When Lilly recognises JT as Santa in the mall she becomes disillusioned and decides she no longer believes in Santa. Frank and Carol decide to convince her that she is wrong. At the same time, JT tries to make up with Sam.
Al is hired to star in what she has been told is a commercial for suntan lotion. But the commercial is for a phone sex hotline instead! After Al clears the air to her confused family about what they just saw on TV, she recruits J.T. to confront the sneaky producer about the commercial.
JT takes up aerobics to impress the instructor but it turns out much more difficult than he thought it would be. When Carol is upset at finding Dana and Rich together in his place, Dana angrily decides that she and Rich will elope.
Dana is looking for something that she and Rich can do together. They decide to do pottery at the local community college. Frank and Carol start spicing heat up their marriage with role-playing games, which leads to a misunderstanding.
Frank doesn't want to go his school's 25th reunion because one guy continually out did him. JT and Rich want to watch the a bikini contest on TV with a group of friends but this goes wrong when he also has to mind Lilly.
J.T. and Rich need money to take the girls on a ski trip, so they decide to make some quick money as male strippers. Carol and Frank are asked to share their marriage secrets with a group at their church.
Frank and JT swap seats at a basketball game. JT wins a pickup truck for being in the lucky seat, which Frank thinks that he should have. When Karen and Al see a very handsome officer speaking at a women's seminar, they fight over him.
Al is cast as an understudy in an upcoming community theater production, but - believing she deserved a larger role - refuses to learn her lines. This makes for huge problems when the star falls ill, and Al takes the stage grossly under-prepared.
Just as Karen is musing that nothing ever happens, Cody returns from his overseas trip after two years, bringing with him gifts for the family. For Frank and Carol he has a cheque for $50 000, which starts a disagreement on how to spend it.
Frank's good work results in him being offered an expensive house at cost. Everybody is happy about the move except Lilly, who reacts by getting into trouble up at school. It turns out that she is not the only one not wanting to move.