Homer makes up for his latest example of fatherly ineptitude (failing to get Lisa a saxophone reed in time for the school talent show) by purchasing Lisa the one thing she has always wanted: a pony. But keeping the horse makes the family cost money and Homer takes a second job at the Kwik-E-Mart to make Lisa happy.
Lisa requires a new reed for her saxophone, because there is a talent show that evening. After calling Marge, Flanders, Reverend Lovejoy, Patty and Selma and "the nice man who caught the snake in our basement", she finally calls Homer at work, asking him to get her one. Homer agrees, and arrives at the music shop five minutes before closing time. Moe's is right next door, and Homer goes in there first, thinking he has plenty of time for a beer beforehand. He walks out with 15 seconds to spare, but is too late, as the shop is closed. Dejected, he goes back to Moe's and finds the shop owner is in there enjoying a drink. Moe helps Homer convince the man to reopen his store. Homer, who barely remembers what he is supposed to pick up for Lisa, purchases the reed and heads for the school. Unfortunately he is (again) too late: He arrives just in time to hear Lisa humiliate herself by butchering the song she chose to play.
Homer tries to make it up to Lisa, but all his attempts meet with rejection. After looking through previous home videos, he discovers just how much she hates him and feels guilty for ignoring her due to him dealing with Bart's shenanigans over the years. In bed, Marge suggests that Lisa just needs time and she will forgive him. However, Homer decides that a 'quick fix' is needed, and plans to get her a pony. Marge tries to be reasonable and warns him not to buy the pony as they can't afford it. Homer ignores her warning and explains that doing girly stuff with Lisa made him a laughingstock with the neighbors, thanks to Bart and Milhouse's shenanigans. He agrees to purchase a pony, regardless of Marge's feelings against it.
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, and, after waking up to find it lying next to her, she 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 not to because they can't afford it. Bart is also disappointed with Homer and demands for a moped. He is quickly silenced by Homer, whom reminds Bart that he still loves him and will get nothing from him.
In order to pay for all the care it requires, Homer takes a second job working for Apu at the Kwik-E-Mart. Homer becomes more and more exhausted after trying to work both jobs. Finally, Marge admits to the kids that their father has been working two jobs to pay for the pony. When Bart realizes this, he attempts to force Lisa to give up the pony. However, Marge puts a stop to it and firmly rebukes Bart for his behavior. She then tells Lisa that she is not going to make her give up the pony, as it is something Lisa needs to choose for herself. Making a heart-wrenching decision, Lisa agrees to give up the pony, allowing Homer to go back to solely working his regular job. Lisa tells Homer that there's 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 admits he was one of his better workers despite his crude nature and sleeping on the job.