Charlie is angry because Kristen is gone. Grace comes into the restaurant looking for support in her homeless program. She wants the leftovers from Salinger's, but Charlie kicks her out of the place. An old friend of Nick comes looking for a job, and Charlie gives him one because his father used to. Claudia believe that everything bad happening is the house's fault, so she gets an exorcist. Someone opens an account in the name of Nick Salinger, and they think it was the exorcist but actually it was Earl. Bailey tells Callie that the last time he had sex was 2 years ago. She seduces him and they sleep together. Sarah is throwing a Halloween party and Bailey goes so he won't feel so bad for cheating on her. Julia is upset because Justin is dating a new girl and tries to ruin everything, but regrets and get them back together. Bailey has a fight with Sarah and goes to Callie for comfort, but she is with another guy, so Bailey decides to look for comfort in a beer.

Charlie has a slogan contest at Salinger's and the winner wants to bring homeless people to have dinner at the restaurant. Charlie has to kick them out so his clients won't leave and Grace prints in the paper what he did, giving him a hard time. They have a discussion and after Grace admits being wrong about him they come up with a solution. Sarah is worried because Bailey is drinking too much, but he says he's only celebrating. He tries to get in the hockey team but he's not in good shape, so he gets invited to the wrestling team, which is the worse in school. He doesn't support Sarah's new job and they have a fight. She says he's changed. Julia is having problems with the roofers. Alec offers her pot, and she turns it down. She talks with his brother and he fires him. They flirt. Claudia tries to get back at Charlie for not letting her go to the conservatory.

Bailey saves Callie from being raped. She is scared of going out of the house and Sarah tries to be her friend and wonders why she doesn't have many female friends. Charlie is helping Grace. He worries about her safety because she lives in a dangerous neighborhood. She tries to kiss him, but he tells her that he has someone - Kristen. After Sam gets fired for not covering the roof, Julia rehires him from her own money. He discovers her lie and she kisses him. Claudia is offered a column in the school paper about heart stuff and she soon realizes that something's up with Bailey. Callie tells him that she wants someone like him.

Joe is getting married, which reminds Charlie of his own wedding. If he and Kristen got married, they would be celebrating their first anniversary. Charlie asks Grace to the wedding, but she gets confused when he makes a speech that is definitely about Kristen. She tells him to make decisions about his life. Sarah wants to fix Callie with her cousin, but Callie turns it into a double date right away. She feels like Bailey and her are getting apart, and she decides to sleep with him, but Bailey can't do it. They promise to give it another try, but Bailey sleeps with Callie again. Sam doesn't want anything with Julia and Claudia says she's pathetic, but Julia insists and Sam decides to go back to the house.

It's Christmas. Jake comes back. Charlie decides to get rid of all Kristen's stuff left so he can finally move on with his life. He tries to help a homeless man at the restaurant. Sarah and Callie are away for the holidays and Bailey wants to spend it all by himself, but Coach doesn't let him. Julia notices that Jake can't see very well and he tells her he's going blind. Charlie sees him leaving and Jake says he has to go for his chemotherapy appointment. Julia asks Bailey to spend Christmas in the house and he brings Coach with him since his daughter is not coming anymore. Stuart gives Claudia a very expensive gift and she tries to give him a bad gift, but he loves it. She tells him that she doesn't like him in that way, and he gets mad, but apologizes and stay over for Christmas dinner. Grace shows up and Charlie invites her to stay, and they all celebrate Christmas.

Libby, Julia's old friend, killed herself. Justin and Julia feel like if they paid more attention to her she would be alive. Her death makes everybody wonder what they are doing with their lives. Sarah realizes that life's too short to spend it with a ruined relationship so she decides to break up with Bailey. Meanwhile, Charlie is having some friends over for his high school reunion. He misses the good old days, but the truth comes up and he realizes his life wasn't as good as he remembered.

Bailey is very excited with wrestling and wants to tryout for All Stars. Although Coach Petrocelli doesn't think he is able, Bailey gets obsessed to win. He wants someone to be there for him, but Callie is mad at him and wants him to move out, and everybody else is busy, but Claudia, who misses him at home. Bailey celebrates every victory with a few drinks, and every time he gets more and more drunk. Julia finds out that Sam was engaged and she joins him in his dinner with his ex-fiancée. She is getting married and he realizes he still loves her. Charlie gets an award for helping the homeless and realizes how much he likes Grace when another man asks her out.

Bailey is not doing so well in school. Callie throws a big party at their place and the landlord threats to kick them out. He is trying to stay sober, but it's hard. Unable to keep up with school, he decides to quit. Charlie doesn't want to rush things with Grace, but the more they try to slow it down, the more they want to be together, so they sleep together. Julia is accepted in Stansford, but is not sure she wants to go. She wants a time off studies, and to find herself. Charlie thinks it's all Sam's fault. Ross is dating one of Claudia's teachers, and she outs him to the entire school. She tries to fix it, but Ross tells her it's not that easy.

Will surprises Bailey showing up at his place. Will thinks Bailey drinks too much, and asks Sarah what's going on, but she doesn't want to talk about Bailey. He tries to advice Bailey about his drinking, but Bailey says it's no big deal. Callie asks him to move into her room. Grace's place burned down, so she moves into the house. Charlie doesn't want Julia to turn down Stansford. Julia, angry with Charlie, moves to Sam's so she won't have to listen to him. Charlie doesn't want her there, and they have a big fight. Sam tells Julia she should go back to the house. Claudia tries to get Bailey to help, but he ignores her.

Bailey is spending so much money on drinking that he can't even afford rent. Julia wants to get Bailey and Sarah back together, but she's still very mad at him. She warns Julia about Bailey's drinking problem, but Julia doesn't believe it. Julia gets Bailey a job with Sam. Bailey steals expensive liquor from the house he was working. Julia wonders if what Sarah told her is true. They try to talk to Bailey about it, but he won't listen. Taking advantage from Julia and Charlie's fight, Bailey gets Charlie to support him. Julia and Claudia don't like Grace. Charlie tells Claudia she should try to be Grace's friend, and so Claudia offers to volunteer at her program, but that doesn't last long. Grace can't stand the kids. Charlie wonders if Grace really wants to be there.

Grace's parents are spending time with them, and Grace doesn't like it, but Charlie does. Claudia is spending time with Avery, which makes his son jealous of her. Bailey spends all his money in drinking and can't afford a clown for Owen's birthday party, so he dresses as a clown. He gets to the party drunk and ruins it. Martin tells Charlie that Bailey might have a drinking problem, but Charlie refuses to accept that idea, even though everybody else thinks so too. Julia breaks up with Sam because he's a racist.

The Salinger family tries to solve Bailey's drinking problem. Claudia calls him and tells a story about Owen falling down the stairs. Bailey rushes to the house, when Charlie, Julia, Claudia, Grace and Sarah hold him. One by one, they all try to show Bailey that he has a drinking problem. He refuses to accept it and fights with everybody. Joe arrives and tells Bailey that his father had a drinking problem too, but he stayed sober 18 year until he died. Bailey doesn't believe it, but Charlie does and proves to be true. They all try to get Bailey into an AA program, but he refuses. When everybody had already given up, Claudia tells Bailey that if he doesn't face his problem and look for help, than he will no longer be a part of the family. Bailey leaves.

Bailey starts to go to AA meetings, and on his first meeting he bumps into Walter Alcott, the man that killed his parents. Bailey has second thoughts about going to the meetings, and he quits. Griffin gets US$100.000 from his lawsuit settlement, and decides to help his father, and he becomes friendly with Griffin just for the money. Grace decides to run for council and makes the Salinger's house her campaign headquarters.

Bailey is sober for a week. Callie gets jealous because Bailey is spending much more time with Sarah than with her, so she tries to help Bailey, but she can't. She goes to Sarah and tries to find out why Sarah is helping Bailey so much. Sarah tells her that she doesn't love Bailey, because she has a new boyfriend. Callie gets drunk and Bailey moves back to the house. Julia starts skipping school in order to hang out with Griffin, and she starts to get F in history, but he tells her to go back to school, and she goes. Claudia is convinced that Grace doesn't care> about her and Owen, so she makes up a story about a reporter just to spend some time with Grace. But she is more concerned about the reporter.

Claudia is invited to play in L.A., and nobody can take her there, but Bailey. They go and Claudia kicks him out of the rehearsals because he is distracting her. In the hotel room, Bailey has nothing to do, and he really wants to drink. He calls Sarah, but she isn't at home, he calls Charlie, but he isn't at the restaurant. So he can't resist and drink, and forget to pick up Claudia. Joe shows up and find a drunk Bailey. He and his wife pick up Claudia, who is very disappointed at Bailey. In the way back, they pass by an AA meeting, and Claudia tells Bailey to go and he does. Grace is really sick, and she may be pregnant. But when the results arrive, and she isn't, Charlie is sad, and when they talk, Grace tells him that she doesn't want to have babies. Julia decides to travel with Griffin all the way to Nevada, but the motorcycle breaks and they have to get back to San Francisco to get it fixed. Griffin decides to buy the repair shop.

Sarah dumped her boyfriend. Her mom tells Bailey that she got into Brown, and Bailey gets mad at her because she is moving away, but she is going to Berkeley instead. They kiss, but Sarah tells Bailey that she just wants to be friends with him. Charlie and Grace break up because she doesn't like children, and she wins the election. Justin is going to Europe for 2 months and ask Julia to go with him. But she doesn't and gets married to Griffin. Charlie, Bailey and Claudia give Julia their mom's ring, and she moves out.