Poor Margaret lives with her mean older brother and sister in a cottage in the woods. Forced to cook and clean, she decides to run away. She meets an old woman who offers to pay her three gold coins if she can retrieve a star-topped walking stick from a dog that has run off with it. Unbeknownst to Margaret, the woman is really a mean-spirited witch who has used her walking stick to make a thousand miserable wishes that have wreaked magical mayhem throughout the forest. Meanwhile the dog, magic stick in mouth, is wishing for someone to throw it for him and̜voila! along comes Margaret. With the ratty, drool-covered stick in hand, Margaret recognizes that it belongs to the old woman.