Lisa is participating in a school talent show and is in need of a new saxophone reed as the one she owns is broken. She calls Homer, who agrees to buy one before heading to the show. However, he decides to visit Moe's Tavern first, and when he arrives at the music shop, it has closed down for the night. Dejected, Homer goes back to Moe's where the music shop owner is enjoying a drink. Moe helps him convince the man to re-open his store. Homer is happy that he remembered exactly which reed he needs to get; however, he then forgets which instrument Lisa plays. After going through many of the instruments in the store, Homer finally remembers that Lisa plays the saxophone and rushes to the school. However, he is too late, arriving in time to hear Lisa humiliate herself by butchering the song she chose to play. After that, she wants nothing to do with Homer, refusing to forgive him. Going through family videos, Homer realizes the extent of how much she hates him for every time he has ignored her in the past because he was either too busy watching TV or dealing with Bart's shenanigans.
Marge encourages Homer to mend his relationship with Lisa by spending time with her. This is unsuccessful, and Homer worries he'll go fruity doing activities suited to little girls(evident when Bart and Milhouse made him a laughingstock). He gets the idea to buy her the pony she's always wanted. Marge is aghast and warns Homer against using the easy way out in purchasing a pony because they cannot afford it. He decides to purchase a pony regardless of Marge's feelings. To afford the pony, he applies for a loan through the Power Plant Credit Union. Mr. Burns personally reviews the loan, and approves it only after determining that Homer does not intend to eat the pony and has no knowledge of the "state's stringent usury laws." Homer buys the pony (named Princess) for Lisa, who, after waking up to find it lying next to her (in a parody of The Godfather), gallops into her parents' bedroom happily telling Homer she loves him. While he is happy that Lisa is no longer angry with him, Homer faces an enraged Marge and she berates him for making such an extravagant purchase even after she warned him against it. Bart is also disappointed with Homer and demands a moped. He is quickly silenced by Homer for it.
In order to pay the rent for Princess's shelter, Homer takes a second job working for Apu at the Kwik-E-Mart. Homer becomes extremely exhausted after trying to work both jobs. Finally, Marge admits to the children that their father has been working two jobs to pay for the pony. Lisa is expecting Marge to say she must give up the pony, especially when Bart aggressively says he can make her do so. But Marge firmly rebukes Bart, explaining that it's something Lisa needs to decide for herself. After watching a meek, sleep-deprived Homer being bullied by his own son at the Kwik-E-Mart, Lisa agrees to give up the pony, and she shares a heart-breaking goodbye with Princess. Lisa tells Homer that there is a "big dumb animal" she loves even more than her horse: that being Homer himself. Homer happily quits his job, much to Apu's dismay and yet admits he was one of his better workers despite his crude nature.